1994 Legislative Session: 3rd Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, JUNE 14, 1994
Morning Sitting
Volume 16, Number 11
[ Page 11851 ]
The House met at 10:02 a.m.
Prayers.
The Speaker: Before calling for the next order of business, I would remind you that on your behalf I have sent a brief telegram to the Canucks in New York urging them on to victory. If you care to read the contents of that telegram, it's posted in the Speaker's corridor.
Hon. G. Clark: I might first advise members of the House that the House will be adjourning between 5:08 and 8 o'clock this evening -- although, if there's overtime, it may be a little later than 8 o'clock.
I call Committee of Supply in Section A, the Ministry of Government Services and -- appropriately -- Ministry Responsible for Sports and Commonwealth Games. In the main House, I call committee stage debate on Bill 41.
COMMUNITY FINANCIAL SERVICES ACT
(continued)
The House in committee on Bill 41; D. Lovick in the chair.
Section 5 approved.
On section 6.
F. Gingell: Section 6 sets out the responsibilities of the directors to manage affairs. In the normal course of events, directors don't manage; directors direct, and managers manage. I was wondering whether the minister sees in the wording of section 6 the directors taking a more active role in the management of the day-to-day affairs of this institution than is normal?
Hon. G. Clark: No. This is, I think, a kind of boilerplate clause -- at least, that's certainly what's intended. The board of directors will be responsible for policy direction and ensuring a fiduciary responsibility, but the day-to-day management will be handled by management and not by the board of directors.
F. Gingell: Perhaps the minister might like to consider an amendment before we get the whole of this finished to ensure that management does have the responsibilities for management and that directors do have the responsibilities of direction.
Under section 6(1)(c) the directors of the corporation have the ability to delegate the "performance of any power or duty conferred or imposed on them to (i) a committee appointed by the directors, (ii) a person appointed under this act, or (iii) a person employed by the corporation." Thinking about who is appointed under this act, the only ones who immediately come to mind are a chief executive officer and a COO. I was wondering if the minister has anything in his briefing notes on this subject, dealing with other persons who might have this duty conferred upon them.
Hon. G. Clark: No. I am advised that this is really a boilerplate section. There's nothing in here that's unique to this corporation, nor are we attempting to set up anything unique in that respect. As I stated at the outset, the board of directors has all the powers of any other board of directors -- no more and no less. It's intended that the management of the corporation manage it in the same way as any other corporation would be managed. The board would be responsible for supervising the management of those affairs, as it says right here, but they would not actually manage it. At the end of the day, as members know, boards of directors are increasingly held accountable for the decisions of their corporations, which has caused a great deal of anxiety in some boardrooms. Given the liabilities and fiduciary responsibilities that they carry, boards are increasingly concerned about management and are taking a more activist role.
Anyway, this is strictly the same as any other corporation. That's what my advice is here. It was not something that came out of the community or out of any kind of internal or external process. They would manage the corporation the same way as any other corporation is managed.
S. O'Neill: Hon. Chair, I request leave to make an introduction.
Leave granted.
S. O'Neill: Today I had the great pleasure of meeting a group of 18 grade 7 students from Ashton Creek. They're in the House. Will the House please make them welcome.
F. Gingell: Recognizing that as each day goes by, it's more difficult for directors to obtain directors' liability insurance -- and, in fact, some professional directors now set themselves up so they can act as directors by ensuring that all of their assets are held by other members of their family or in family trusts.... We all smile about these things, but it really is a serious matter. We start to look at the liabilities that pass through to banks from environmental issues and the responsibilities that can flow through to lenders from those issues. I wonder whether it would be appropriate for you to make a definitive statement at this point on whether or not the government intends to ensure that there is some kind of indemnity, some hold-safe arrangement. Is that something you definitely will not do, or is it something you will do if it's deemed to be needed?
Hon. G. Clark: The answer really is the latter. To be frank, we haven't considered that yet, but I can advise the member that I agree completely. This is something which is of increasing concern in the boardrooms of Canada, and quite legitimately.
Just by way of background to this information, members are aware that I was intimately involved in the rescue plan, if you will, for Canadian Airlines. I can see some of the wealthiest men in Canada, who are on the board of Canadian Airlines, seeing their entire wealth -- everything they had worked for all their lives -- literally disappearing because of directors' liability. While I think it's important that there be liability for directors, we need to be careful with this. It's part of the nature of being on a board and making sure that corporations and management act in a prudent fashion. However, it clearly is an increasingly difficult problem that's being faced by many private corporations.
[10:15]
Prior to us taking office two and a half years ago, there was a move to extend provincial indemnity for the boards of directors of Crown corporations and agencies. That has been continued. I must tell members that it's increasingly required that there be a government indemnity for serving on these kinds of corporate boards, in order to ensure the quality of representation we would like on them. While it's
[ Page 11852 ]
not contemplated in the act, and we haven't canvassed the matter internally, I can say that I am quite sympathetic to attempting to secure quality board members. Therefore some kind of indemnity may well be required.
Sections 6 and 7 approved.
On section 8.
F. Gingell: One has to get one's mind back into the flow of this bill. It passes too quickly.
This is an unusual section. I'm not sure whether this is boilerplate. Could the minister start off the discussion of section 8 by advising us whether this is boilerplate?
Hon. G. Clark: It may be a bit unusual. My recollection is that it's to do with the Financial Institutions Commission. I'll just give the members the benefit of my general remarks.
This section addresses situations when a director resigns either voluntarily or as a result of a disagreement. It enables a director to make a statement to the corporation regarding the director's intended resignation from the board of directors. This allows directors the opportunity to be heard, particularly where there is a conflict among the directors, so situations that may bear on the stability of the corporation cannot be easily concealed. It also ensures that conflicts are aired, where appropriate, to protect the corporation from possible damage caused by malicious or spiteful statements. This section also requires that either the resigning director or the corporation must notify the superintendent of financial institutions and the Minister of Employment and Investment of the reasons for the resignation. This is essentially a transparency clause to give comfort to the public, the Financial Institutions Commission and the depositors of this corporation that if there is a dispute it cannot be easily concealed. It's good legislation. However, I must say it's not particularly unique to this section -- at least I'm advised it's not. It's something increasingly seen and supported by the Financial Institutions Commission.
Section 8 approved.
On section 9.
F. Gingell: I was wondering if the minister, from his notes, can advise what the qualifications are under section 138 of the Company Act?
Hon. G. Clark: The guidelines for disqualifications under section 138 include persons who are under 18 years of age, who are found to be incapable of managing their own affairs by reason of mental infirmity or who are undischarged bankrupts.
R. Neufeld: Maybe the minister could briefly explain section 9(1)(e): "...is an individual who ought not to be in a position to control or influence a financial institution." Maybe he could broaden that a bit so we understand exactly what it means, because that can mean almost anything.
Hon. G. Clark: This is a clause which gives extraordinary power, I guess, to the superintendent of financial institutions. I believe it's fairly new, although I'm not sure that it is with this particular bill. The Financial Institutions Commission essentially demands this kind of clause. There are some names that are commonly attached to this particular clause, which I won't mention in the House -- notwithstanding our indemnity in this House, but.... In other words, the superintendent of financial institutions simply wants the power -- subjectively, really -- on the basis of evidence that he or she, or the commission, has, which isn't necessarily public information, to bar an individual from being made a director due to largely financial concerns or problems they have had in the past. Obviously, we don't anticipate or hope that this will ever be used, but it's one that....
My staff have also advised me that bureaucrats or public employees who are in a regulatory role are also covered by section 9(1)(e). So you couldn't put on a staff person who may be involved in regulating this corporation.
Anyway, it is a fairly sweeping section. But you may recall that we discussed on a previous day whether this would be regulated by the Financial Institutions Commission, Treasury Board or otherwise. We actually have both, but we wanted, really, to make it regulated by the Financial Institutions Commission, to have that somewhat independent arm's-length regulatory role performed. They do have significant powers that have developed increasingly over time with respect to Principal Trust and other affairs, and the Financial Institutions Commission is increasingly exercising a more subjective role. So this clause allows them to take action if they deem it necessary.
Section 9 approved.
On section 10.
G. Wilson: This advisory council is an interesting concept. We have already made it very clear what the community is and the intention of this particular institution vis-a-vis that community. We are told in this section that the advisory council can be a paid group of individuals, although the allowances are only to be reasonable for travelling and incidental expenses -- however, we don't know how much that is. And we understand that the first advisory council is going to be appointed by the minister "to reflect the diverse cultural, geographic and economic needs of the community." Given that there is a prescribed community in the schedule, what does it mean by a geographic need? That's the first question of many.
Hon. G. Clark: First of all, the primary purpose of this institution is to service the downtown east side and Granville South areas of Vancouver. That's the geographic area in the act which limits the location of the bank. The member is referring to the fact that anybody can put money on deposit there if they share the aims and goals of the institution. That is correct, but I think it's nitpicking. Even though individuals from all over British Columbia could choose to deposit there, they are certainly not going to choose to bank there if it's not convenient and therefore would not be eligible for election, for example. That's what the member was getting at. The primary purpose of the institution is to service the downtown east side and downtown south. The member may have a semantical or technical concern, but I don't think it's a real one. The primary purpose is the community it serves being the geographic community where the bank is located.
G. Wilson: Herein lies the concern, as it's been expressed to me by members who live in the community. The advisory council has been sold to members in the community who were looking for a "community bank" as being an opportunity for members of the community to actually have
[ Page 11853 ]
direction or be able to provide direction with respect to how the institution works. It is suggested that that may be done under the advisory council under section 10(7)(b), where it says that they can "make general policy recommendations to the directors about the strategic direction and functions of and the effectiveness of the delivery of services by the corporation...." My guess is that that's supposed to ensure there is some reasonable guarantee that people in the community are going to be able to direct the way the bank works in their community. The concern is, however, that the appointments to this advisory council may far more reflect the interests of the depositors, in terms of the kinds of investments into which that money is going to be put, than the general cash services side of the situation, which is in the community.
Could the minister clarify that? I assume that it's this minister, or maybe the Minister of Finance, who's going to have the opportunity to appoint the first seven people. I would guess that it's going to be this minister, because I can't see this minister relinquishing the control over that rather weighty decision.
Hon. G. Clark: I won't comment on the last remark.
First, I'll go back a bit to the question the member asked earlier about section 10(3). While my previous remarks were, I think, adequate to deal with the general topic, section 10(3) deals with the first advisory council, which is appointed by the Lieutenant-Governor-in-Council. So in that case, when referring to the "cultural, geographic and economic needs of the community," "geographic" really does mean the area in which the bank is located, as defined in the legislation.
Further than that, I would again remind members that there will be seven members on the advisory council elected from the depositors. Five out of the seven must live in the geographic area where the financial institution is located. Automatically, then, even though community is broadly defined, the advisory group must have five people out of seven, as a minimum, who actually live in the geographic area serviced by the institution. I think those are important points. So the initial council will be appointed, and then after that, obviously, they will be elected.
I want to make the point again.... The member said that people will be more concerned about depositors than the community. There is really very little distinction between the two, in my view. But if you want to make a distinction, because there may be individuals who want to deposit in this credit union.... We hope there will be large institutions, although there's no guarantee...
An Hon. Member: Government.
Hon. G. Clark: Government, maybe.
...that will make deposits in the institution to help finance it. There's only one vote per depositor. If you put $1 million on deposit, you have the same vote as a welfare recipient who has their cheques automatically deposited there. There will certainly be a thousand times more social assistance recipients at this bank than there will be depositors from around the province, in my judgment.
[N. Lortie in the chair.]
If the member is concerned that the advisory council may elect people who aren't representative of the community, first of all, they can only elect two out of seven who don't live in the community -- and even then, the people who are voting in the election must be depositors. It's one person, one vote regardless of the size of your deposit.
That should give the member ample comfort that this cannot be controlled, if you will, by unions or pension funds. The advisory council has to be controlled by the people in the community, and they will be electing people for this advisory council. Even if they try to elect representatives of unions or pension funds, they can only choose two out of seven, if they don't live in the downtown east side. There aren't very many -- with the greatest respect -- union business agents or pension fund managers living in the geographic area defined in this legislation, although there are a few.
G. Wilson: I don't know how far down the road we want to go, but this minister is probably one of the more skilled politicians in this province and knows only too well how easy it is to move an election on these kinds of membership-driven elections. However, we won't go back to past nomination fights and what have you, because perhaps it's not directly relevant.
[10:30]
Let me just say that the implication of a principal residence.... If we're talking about the kinds of residents who would live in Vancouver's inner city, surely the term "principal residence" wouldn't apply. I would assume very few of these individuals have more than one residence. I'm curious about that. There is a very real fear that what is taking place in this advisory council.... It is only going to make recommendations; it's not like it has the weight of authority to pass bylaws that are binding on the directors. But there's a very real fear that this bank's policies and directions will be driven by organized labour, which is going to be using the bank as a means to move pension moneys into various investments. On the surface that may not be a terribly bad idea, provided that it doesn't encumber public tax dollars in the matter of guarantees, which is what we will get to later.
The minister hasn't shown anywhere under section 10 where there is a provision for that protection, save and except for the fact that in subsection (5) it talks about the individuals elected by these depositors having a principal residence.... Does principal residence mean an address that can be stated on an application form, or does it mean that it has to be somewhere where an individual actually resides and can therefore be tracked? The problem with this is that if it's an area where a person resides -- and we're dealing with a lot of people that the minister has referred to as low-income or welfare recipients -- then finding that address may be difficult. This government has already introduced legislation in the Municipal Act to accommodate those who do not have a fixed address who would be seen as "transient peoples." The minister may have walked himself into a.... Maybe it's just a semantical argument on that question, but maybe not.
Hon. G. Clark: This was something that came up in the community. First of all, contrary to the perception of many people, the downtown east side in particular -- I'm not sure about downtown south -- is one of the more stable communities in British Columbia. The average length of residency is about 15 years. But the history of the community is that there is a large number of seamen and loggers who are older and have come upon hard times. Those industries and the ability to go and work in those industries, obviously, is declining in many respects in British Columbia -- at least in the historical context. But the notion in the community is that there are people in the downtown east side who may get a
[ Page 11854 ]
job cooking on a fishboat, or logging for a couple of weeks or a month in Prince George or up north -- and that does happen from time to time -- and that someone who has spent 15 years in the downtown east side, but who works a month or two a year -- maybe an aboriginal person who goes back to their home community to work the herring season or something -- wouldn't lose their right to vote. That's the genesis of it. Principal residence means that they have to live there, not just have an address. They have to prove they live there; it's not an agent of convenience.
I'm not sure if the member had any other questions in there, except for his ability, of course, to manage nomination, leadership contests and stuff like that. But he made some reference in that regard, which of course I won't comment on. Other than that, I don't think he had any other questions.
G. Wilson: I think the minister, by way of perhaps trying to take a shot, has just proven my point about how one can manipulate the outcomes of political events.
The point is that the community really wants to have control over this bank. There is concern and fear among people in the community that as well-intentioned as this may be -- and I guess time will tell whether it's a good decision or not -- there is a danger, with respect to the delivery of services, that the bank is going to have to play a much different role to protect investors. So I think it is a legitimate question about this advisory council, because it really is the only way the directors are going to receive direct input from the community as to whether or not the community will be safeguarded from having that role undermined by a power block essentially, that might come in and seek to take over not only the advisory role but also the directorship. They want some guarantee from this minister that that will not happen.
Hon. G. Clark: I just want to make the point here that this is a compromise, if you will, that was worked out with the community. We've had this discussion before. I suspect members opposite would be the first to criticize if we simply turned this over to the community with the government guarantees and investment that are involved. It is a compromise between the government making sure that the corporation is well managed, and protecting the government's investment -- which is not as large as some have indicated, but there is a guarantee on the deposits and a $5 million equity investment....
An Hon. Member: Plus another million.
Hon. G. Clark: Plus another million -- and, in fact, to characterize it fairly, that $1 million is the real working capital and start-up, and therefore it is a riskier investment than the others. The others are.... With FICOM regulations and prudent management, we think it's very conservative. But there is some tax money here at risk. There are associated concerns that members have indicated, which I share, and that's why this has to be managed with the actual board being appointed by the Lieutenant-Governor-in-Council. We've tried, though, to marry that to the notion of community control and input that the member has talked about, and I agree.
We certainly intend to take that seriously, and I have lots of faith in the people of the community that we can balance the need to be fiscally conservative, the need to try to protect the investment -- in fact, to try to make sure that there is no ongoing subsidy -- and the need for a service which is more responsive to the community -- and which, it seems to me, the member could argue is more expensive. That tension is there. The member is absolutely correct. He has highlighted it, and he thinks it's going to be a serious problem. I would say it's a serious challenge.
If there are people in the downtown east side who believe this institution is going to somehow solve all their problems and be kind and generous.... On the other hand, we're going to have some tough people there trying to manage it so that we're not running at a loss. That inherently sets up some tension.
But I say in all seriousness -- without criticizing the member, because I understand the concerns -- that I have a lot of faith in the community. They've worked through this. There have been 15 or 16 meetings in the downtown east side. They've been very understanding. I've been very impressed by the community and their desire to try to make this work. The tension exists; it will always exist. I think that's probably a healthy tension. But don't shortchange the desire of the people of the community to not make this a drain on the taxpayers, to make this a success and to try as well to be conservative, in the sense that we want to minimize the risk.
I don't diminish what the member says. There will be ongoing challenges in that inherent tension between the government as owner and the community, in terms of what they would like to see accomplished in the community.
J. Beattie: I wonder if I might have leave from the House to make a couple of introductions.
Leave granted.
J. Beattie: On behalf of the Deputy Whip, the member for Shuswap, I'd like to introduce two classes that are in the precinct today. First I'd like to introduce 37 grade 7 students who are here from Parkview Elementary in Sicamous. They are accompanied by their teacher, Mr. S. Atkins. They're here to enjoy the rainy Victoria weather, but also to take part in some of the activities in the Legislature. Also from this hon. member's riding is a class of grade 7 students from Ashton Creek Elementary in Enderby. They're accompanied by Mr. Alan Harrison and six adults. On behalf of the member, I ask the House to make these students welcome.
G. Farrell-Collins: I ask leave also to make an introduction.
Leave granted.
G. Farrell-Collins: I want the House to help me welcome 25 grade 7 students from the County Line school in Fort Langley-Aldergrove. They're here with their teacher, Mr. Mitchell, and several parents. It's not a particularly nice day to be in Victoria, as I understand it's still pouring rain out there, but the roofs don't leak here -- except in the opposition offices. I'd like to welcome them here and have the House help me welcome them.
F. Gingell: When one looks at the revision of section 2(2)(b), which indicates that three of the directors shall be nominated by the advisory council, and then at section 10(2)(c) and section 11, one gets the feeling that three of the directors are going to be nominees of the advisory council. One also gets the feeling that you're going to appoint as directors whatever three the advisory council come up with. The only means whereby you would be able to change that is to go through the process under section 9, where FICOM
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says someone is an unsatisfactory person. Would you correct me if I'm wrong?
Hon. G. Clark: No, the member is absolutely correct. The advisory council will nominate. Again, in keeping with comments I made a minute ago, the Lieutenant-Governor-in-Council is the only body which makes the appointments to the board. That is as it should be. So we are not statutorily obligated to choose or to appoint to the board those who are recommended. But I assure members that I fully intend to recommend to cabinet that we nominate the three individuals recommended by the advisory council.
I think it's important that we recognize that if the advisory council is not working, then this institution isn't going to work. In other words, there are some checks and balances here, which allow the cabinet, if you will, or the Lieutenant-Governor-in-Council, to override those choices or to refer back for further nominations. If we are at that stage, then the institution is not working, and it won't be around very long, in my view. I would submit that after the initial appointments to the advisory council, there will be elections from the deposit base over a period of time, and we will be accepting the recommendations of the advisory council.
F. Gingell: I would like to suggest to the minister that he doesn't have any choice. He said that the Lieutenant-Governor-in-Council makes the appointment. Section 2(1) clearly indicates that there must be 11 directors -- no more, no less -- and subsection (2)(b) indicates that three must be nominated by the advisory council. We then turn to section 10(2)(c), which says that they must do that. But when you turn to section 11(2)(a), the advisory council can "nominate for each position to be filled one individual...." They can't nominate two. It would seem that you are subject to a restriction of only those individuals.
Hon. G. Clark: I think the member has made a fair comment, that there must be 11 members on the board, and therefore we are constrained in that respect. As part of our discussions with the community, they were concerned that if we just gave them a couple of seats on the board and then put 20 other people on, they'd be overwhelmed. Again, it's trying to achieve that balance. This is a debate in the community. They've agreed with it, but I'm sure they would prefer more. We wanted to say 11 and three, thereby looking at about 25 percent of the board being essentially elected from the deposit base. Many members of the community would like more than that, and I'm actually sympathetic to more. But again, we wanted to balance off the rights of the shareholder, the government of B.C., and make sure they were protected. The member is correct. The reason why it says there must be 11 is to give comfort to the community, and to everybody, that we aren't going to appoint 20 or 25 from the government and dwarf the two or three from the community. But at the same time, we're obviously not giving majority control to the depositors.
[10:45]
F. Gingell: Without being able to find the specific section, I have it firmly in my mind that there is the ability to appoint a member of this Legislature as a director. Something in some section indicates that it is possible to appoint MLAs to the board of directors. Can you advise me if you have made a decision on whether or not you intend to do that?
Hon. G. Clark: I've answered this question already, hon. member, but that's okay. No decision has been made on that. We've attempted to have an MLA on the boards of all Crown corporations, but no decision has been made in this regard to put one on as a board member. If the member is seeking nomination, though, he is certainly welcome to let me know. At this time, we really haven't discussed it. Clearly it is an option for the government.
While we are on this topic, I did indicate that if I could -- depending on some regulatory decisions, I guess -- I would like to put a public employee on the board, possibly from the Ministry of Finance or the Ministry of Employment and Investment, in the early stages at least. I can think of some excellent candidates in my own ministry -- including Mark Lofthouse, next to me -- or in the Ministry of Finance. The director of banking, for example, would be superb in helping us establish this institution. So those are options the government does have.
R. Neufeld: Section 10(1) defines a depositor as "a person in whose name a deposit account with the corporation is in existence and has been in existence for a period of not less than 90 consecutive days." As I understand from second reading and the discussion about this bill, a lot of people had problems with addresses and that's why they couldn't bank in the normal institutions. I see that we have made allowance for that. It says nothing about address; it just says "depositor." I would like to know about the 90 days. The minister also talked about short-term deposits. Ninety days seems to be a long time if a person doesn't have an address. Maybe I'm wrong -- and the minister can correct me -- but it seems inconceivable that they would have money in an account for 90 consecutive days. Maybe I'm wrong; maybe there is some reason why this has to be there.
Hon. G. Clark: There is no particular magic to the 90 days, I'm advised. It is partly to deal with the questions the member for Powell River-Sunshine Coast indicated: so that you can't bus in 500 people to put some money on deposit to be eligible to vote. You have to be a depositor for 90 days prior to any election to the advisory council. Even though the advisory council has the power to put only three out of 11 on the board, we wanted to make sure that we weren't subject to any of that kind of politicization which might occur.
F. Gingell: Subsection (7) reads: "The advisory council may receive and consider any complaints made with respect to the corporation...." Are there any provisions -- which I haven't found -- that require management or the board of directors to ensure that any complaints made against the institution shall be forwarded to the advisory council?
Hon. G. Clark: In discussions with the community, they preferred to have the power to report directly to the minister. It was felt that that would ensure they would be heard by the corporation, and I had no problem with that. You are correct: the advisory council can hear complaints against the corporation and make recommendations. At the end of the day, they can also report to the minister directly if they don't feel their concerns have been addressed.
F. Gingell: One appreciates that one doesn't need to set out in the bill the way in which the chairman of the board of directors is going to be elected, but it may be appropriate in the circumstances where you are creating an advisory council. There are not a lot of precedents for exactly how an advisory council determines who is going to be chairman, whether they have any resources available to them, and
[ Page 11856 ]
exactly the fashion in which they are going to operate. If you don't, some conflicts may arise between the advisory council and management or between the advisory council and the board, and put the advisory council in a very difficult position and unable to fulfil their mandate.
Hon. G. Clark: I don't think the latter point follows. I will say -- and the member for Powell River-Sunshine Coast and I have made this point several times -- that there is some potential for conflict between the management and the advisory council, and there is potential for conflict between the board of directors and the advisory council. I am under no illusion in that regard. We tried to find a balance and some input, but at the end of the day the board and the shareholder, the government, are responsible for the financial affairs of the corporation. That may lead to come contradictions and tensions between the two.
But I'm not worried about electing a chair and running a meeting. Many of the people coming out to the meetings are people who have been active in the community, living in co-ops or chairing housing cooperatives in the downtown east side -- running some fairly big operations, actually. So I don't think there's any problem with the seven members of the advisory council running meetings and electing a chair themselves, nor is that required in the legislation.
There is some question as to remuneration. We've had this discussion. Anybody that goes on the advisory council.... I mean, it's not a job; they won't be paid as a job. But there may be a modest per diem in recognition of time served at meetings, etc. That certainly sounds entirely reasonable to me for the corporation.
The question, though.... I guess all members are probing this, and it's legitimate. Again, there are these tensions between the two. There is some tension between a board of directors and the management as the board of directors attempts to ensure that management is running things as efficiently as possible and maximizing the return to the shareholders -- as is their job -- or pursuing the policy that the board sets down.
We are adding another level: an advisory council, which then interacts with both the board and the management. So I don't dismiss that that complicates matters. The member is correct that this is unique. It was, again, part of the discussion with the community to marry the two concepts: a traditional financial institution, owned and operated, if you will, by the government and regulated by the Financial Institutions Commission; and at the same time, the credit union aspects of this, to give more control and influence to the depositors and the people who are actually doing the banking at this institution. So this is, quite correctly, the section which tries, as best we can, to bridge those two concepts, and I think it is quite creative.
It came out of the community itself as they tried to deal with the problems that we put before them. We said: "How do you think we should give you that input ability?" We asked them to recognize the government's obligations and liabilities in terms of managing the corporation, and this is something they came up with. I think it's a good mix, but it's not without its potential problems as we work to try to develop this unique institution.
Sections 10 to 12 inclusive approved.
On section 13.
J. Weisgerber: In debates and discussions earlier on, particularly in sections 4 and 5, I raised some concerns about the possibility of the bank deciding to change rather dramatically the direction of its loans or investments. The minister used section 13 to try to assure me that in complying with the Financial Institutions Act and having to file a business plan with Treasury Board, taxpayers should be assured that the risks, if any at all existed, would be minimal. I think we all recognize that there have been failures in financial institutions that were regulated by the Financial Institutions Act. So I can only assume that the minister believes that because Treasury Board has to review the business plan, that substantially reduces the risk. I, quite honestly, question that.
Hon. G. Clark: Can I answer?
J. Weisgerber: Certainly, if the minister would like to answer, I'll pause and listen.
Hon. G. Clark: I just want to reiterate and remind members that this will be the most regulated financial institution in Canada. The superintendent of financial institutions will regulate this institution, and the lending and investment policies of the institution must be approved by the superintendent annually. So it can't do wild and crazy things. It has to go through that annual process of approving its lending, borrowing and investment strategy. In addition to that -- which every institution has to do -- it has to file its annual business plan, which will include its lending and investment strategy, with Treasury Board, to make sure that the shareholder is getting value for its money and to make sure that the corporation is acting prudently. I want to make sure it's not just Treasury Board -- or just FICOM, in this case. Both the central control agency for government -- Treasury Board -- and FICOM have to be satisfied before the corporation can pursue its lending or investment strategy. I think that should protect everybody from any kind of wild swings or unaccountable changes which the member seems to think may be possible.
J. Weisgerber: I believe that the minister has confirmed my initial statement. The only difference between this institution and any other financial institution is the approval of the business plan by Treasury Board.
Interjection.
J. Weisgerber: The minister somehow recognizes that other financial institutions have failed. We are talking about an institution whose funding is going to be guaranteed by the province, almost without limitation. The $2 million deposits from various groups will be guaranteed -- whatever groups Treasury Board and cabinet decide are appropriate -- and $100,000 deposits from individuals. The province will be on the hook guaranteeing the deposits. It seems to me that if Treasury Board, in cooperation with the directors of the institution, were to decide to make a fairly dramatic change in the investment or lending policy of the bank, as long as that fell within the guidelines of the Financial Institutions Act -- as other failed institutions have done -- the possibility exists. Is the business plan tabled with and approved by Treasury Board then made public? Is it recorded? Is it tabled with the Legislature? What kinds of knowledge do the people ultimately guaranteeing those deposits have about the business plan and any changes in the business plan that might occur within the bank and be approved by Treasury Board?
[11:00]
[ Page 11857 ]
Hon. G. Clark: I may not have caught all of your remarks, hon. member. I'm not sure of the answer about whether this is covered by the Freedom of Information Act. I think it is. I haven't looked at the consequential amendments. I don't have any problem with the business plan being made public, with one exception: if it has an obviously material negative impact. After all, it is a commercial operation, and we have to make sure that it's not jeopardized in any way in its strategy.
The minister responsible is accountable to the House. He can be called before Public Accounts when the House is sitting. There are very stringent guidelines with respect to the Financial Institutions Commission. As the member knows, Treasury Board is quite diligent in ensuring that it isn't acting imprudently. The member may be correct that the bill is probably silent on the question of whether the business plan that goes to Treasury Board is tabled. It will be subject to the Freedom of Information Act. At this point I can't see any problem with releasing it publicly, but there may be a fiduciary question or obligation that makes a materially negative impact on a third party -- which I guess it could down the road -- and then we may not be able to make parts of this business plan public.
J. Weisgerber: I have a vision of getting something back from my FOI request that would look like....
Interjection.
J. Weisgerber: The minister rather glibly refers to FOI as being the route to go. The history of this Legislature has been that very few substantive releases are made. Indeed, by the time the severing is done, one is always left with questions about what information you received and what you didn't. It would certainly give me a great deal more comfort if the minister would simply commit today to tabling the business plan from Treasury Board to Public Accounts and to this Legislature. If there is that kind of the confidence in this process, a commitment today to tabling the approved copy of the business plan would certainly put a lot of my fears to rest.
J. Beattie: I wonder if I might beg the indulgence of the House once again for a further introduction.
Leave granted.
J. Beattie: About 20 minutes ago I introduced the Ashton Creek Elementary School from Enderby.
An Hon. Member: This is the third time.
J. Beattie: This is not the third time; this is the second time.
I had the opportunity of speaking to this wonderful group of people down in the foyer. We were discussing this very important piece of legislation, which pertains to banking in British Columbia. These people were very interested in this, and I'd like them to be able to follow this discussion again. Please allow me to introduce to the House once again this grade 7 class from Ashton Creek Elementary School in Enderby, accompanied by a number of adults and their teacher Mr. Harrison.
Hon. G. Clark: Before we were interrupted, the member said it would give him great comfort if I agreed to table the business plan in the House or make it public. If the member is going to support passage of the legislation, I would be delighted to table the business plan.
In all seriousness, I'll make the commitment now to make public the business plan, subject to one caveat, and that is that if it has an adverse material impact on a third party, I won't do it. I hadn't given thought to this, but the seven members of the advisory council will have the business plan. For all intents and purposes, I think it will be broadly circulated, and I don't have any problem with making it public. I just have that one caveat. That will probably be down the road five or six years. I don't know if the member will still be here five or six years from now, but assuming he is still here, I'd be happy to share it with him at that time. We will try to be as transparent as possible. There could be a small problem down the road if it becomes a bit more active, even in a very modest way, in that it could have some financial impact on a third party.
J. Weisgerber: I take some comfort from that. That would assure us that we would at least get one copy of the business plan tabled under this government's authority, and then it will be up to the next government to decide whether or not they will continue.
Is the minister saying that this caveat, as he describes it, would lead perhaps to severing a portion of the business plan? Could the argument be made that if there were something in the business plan that affected a third party, then the business plan wouldn't be tabled that year?
Hon. G. Clark: It would just sever a portion of it. I think it's highly unlikely. I don't know if we'll table it in the House. We'll make it public. In other words, we don't make a statutory commitment to table it in the House. In thinking about it, the advisory council will get copies of it. I suspect it will be public in any event. We have no intention of hiding anything in this regard. If some section of it has a material impact on a third party, then I suspect that would be the only section that would be severed.
D. Mitchell: While we're still on section 13, dealing with the business plan, I'm somewhat puzzled by the minister's responses to the questions from the member for Peace River South. The reason I'm puzzled is that this section deals with the business plan for the agency or Crown corporation this bill is establishing.
There's a concern about the accountability. The minister has talked about accountability for this agency, and he's indicated that he's in favour of accountability. But the business plan to be established by this section of the act is going to be an important document. We don't know what level of detail this business plan will go into, in terms of the operations of the Crown corporation that's being established. Business plans often vary in terms of the level of detail. The minister says five or six years down the road there may be some concerns. We can't contemplate that today; we're talking about establishing a new agency today. A business plan is going to be created under this bill. Why the business plan cannot be made public and cannot be tabled in this Legislature puzzles me. The minister has couched and qualified his language quite a bit on this.
I wonder if the minister would entertain what I regard as a friendly amendment to section 13, which would add a section 13(1)(b). It would simply say: "Following approval of the business plan" -- referred to in section 13(1), which would be renumbered section 13(1)(a) -- "by Treasury Board, it shall be tabled with the Legislative Assembly of
[ Page 11858 ]
British Columbia for annual review by a select standing committee of the Legislature." I'd like to table that.
It seems to me that since taxpayers' dollars are going into this agency, the Legislature is the proper forum for accountability. A precedent on this is the Forest Renewal Act, whereby with a different bill that's come forward in this session of the Legislature the government has agreed -- and I applaud them for this -- that the forest renewal plan will actually have its board and report come before a committee of this Legislature every year. That's accountability.
Accountability is not Treasury Board -- a cabinet committee made up of politicians, whether it's this or any future government -- meeting in secret to approve or amend a business plan of an agency that's approving the expenditure of tax dollars. If we really wanted to talk about accountability, the minister would have no reluctance to have the business plan tabled in this House once each year and reviewed by a legislative committee of this House, whether it be the Public Accounts Committee or, perhaps more appropriately, another select standing committee dealing with finance and government agencies. We'll leave it up to the government to decide which legislative committee. But if we're really in a genuine way concerned about accountability, I hope the minister will agree to approve this friendly amendment.
The Chair: The amendment is in order.
On the amendment.
Hon. G. Clark: Unfortunately, I can't support this amendment. Let's just make the distinction. The member has indicated support for the forest renewal plan mechanism of business plan review, which is an innovation I support and was involved with. That was the case where the government increased stumpage fees in the order of between $400 million and $600 million, which will be doing....
Interjection.
Hon. G. Clark: No, it's still about $400 million, as I say to members. And it will all be invested in the industry in a tripartite way. It's important, I think, that the House scrutinize that kind of expenditure, which otherwise would accrue to the consolidated revenue fund and therefore be subject to the estimates debate. This is an institution which is much more modest, of course, and which we indicate -- which we anticipate and fully hope -- over time will have no ongoing subsidy by the taxpayers. It will be a very modest venture, but an attempt to get a certain amount on deposit.
The logic of the member, if you're really worried about the guarantees.... There are about $12 billion worth of provincial government guarantees to credit unions, and we don't ask credit unions to have their business plans approved in the House. The government is on the hook for that, if you will. The reason we don't is that FICOM regulates them. FICOM regulates this institution; that's where there's accountability. And unlike any other institution in this province, not only is FICOM regulating it -- and therefore there is accountability for depositors -- but Treasury Board is regulating and approving the business plan. I just made a commitment further to that -- it isn't in the bill, but I'm delighted to make it -- that the business plan will be made public, subject to one very small caveat that I don't think will be required. I don't mind making it public. I just want to make the point that we in this House are subject -- as I am today, or any minister responsible is -- to debate on it. The Public Accounts Committee can call before them the corporation, this corporate entity, and fully canvass the business plan, which will be made public. I believe that's more than ample scrutiny. As I said, it will be the most regulated financial institution in the country.
F. Gingell: I strongly support this amendment. One of the biggest problems that members in this House have is dealing with the accountability of Crown corporations -- whether it be B.C. Hydro, B.C. Rail or ICBC -- and the process we go through when trying to deal with them in estimates, which to me really isn't an appropriate manner. The ability to have a select standing committee is a very good start. I don't think the Public Accounts Committee is the appropriate one, because Public Accounts deals with the past and the business plan deals with the future. This government, which speaks so strongly of accountability, should take this opportunity to start a process by which more accountability takes place in a more meaningful manner, which I believe is with select standing committees. I can assure the member opposite that when we become government immediately after they call the next election, we shall carry on and push for that. I think the member for West Vancouver-Garibaldi has come up with a good amendment. I think it's going in the right direction, and I urge everyone to support it.
[11:15]
I have one further question while I'm on my feet that works all through this. It's about the way the timing would work. I can't remember from earlier committee discussion of the bill whether the date for the financial year-end has been set. That becomes an issue here with business plans and audited financial statements. I wonder if the minister could give us that date.
[D. Lovick in the chair.]
Hon. G. Clark: March 31 is the fiscal year-end for the corporation.
F. Gingell: So we're saying that on or before January 31 of each year, you file a business plan for the year that's going to commence in two months' time. The business plan calls for a whole series of appendices, one of which is a statement of existing and projected assets and liabilities. I wonder as of what exact date you would plan that, and whether they would be audited or if they would be management statements. Exactly how would that all work? Methinks you're going to have a timing problem.
G. Wilson: I would speak strongly in favour of the amendment for the same reasons that were just outlined by the member for Delta South and articulated by the member for West Vancouver-Garibaldi, with one addition: to recognize the need -- and I'll be raising this more specifically when we get to section 14, the next section -- for accountability in terms of a business plan that not only gives us some assurance with respect to guarantees, which is just one issue, but more importantly, some guarantee with respect to government's other involvement -- i.e., by virtue of loans. We notice -- and I intend to raise this as a direct question under section 14 -- that under the borrowing powers, the act is absolutely silent with respect to part 6, sections 41 and 41.2, of the Financial Administration Act, which would require the Minister of Finance to report within 30 days government borrowing or lending from one institution or the other.
I think that this is a very timely amendment. It will provide Members of the Legislative Assembly a greater
[ Page 11859 ]
ability to scrutinize the investments, or business plan generally, of this institution. If the minister is true to his commitment to have more accountability -- and we're sure on this side of the House that he is because we see him nodding and smiling over there -- then he will see this as a friendly amendment and simply accept it, and we can move on.
J. Weisgerber: I too want to support the amendment. I take some comfort from the assurances given by the minister earlier. But there's always a significant difference between an amendment section that is in the legislation and an assurance given by the minister -- different levels of commitment, certainly far more binding on future governments and future ministers. I also know that government is always somewhat loath to accept amendments from the other side of the House, but I think the amendment is put forward in a spirit of cooperation in this instance. It's a friendly amendment. It appears to be supported by all members in opposition at least, and I think that it would be seen as a very solid gesture and a clear indication of goodwill by the minister to reconsider this amendment and indeed accept it.
Amendment negatived on division.
G. Wilson: It's too bad that the minister didn't at least defend not supporting that amendment, but anyway, he didn't.
Section 13(3)(b) makes particular reference to section 134(4) of the Financial Institutions Act with respect to lending policy. Section 134(4) of that act is fairly specific with respect to the requirements under the Financial Institutions Act. But what it also does is bind the institution to having a lending committee or some form of internal audit with respect to borrowing policies. I just wonder if that investment and lending policy is going to be linked with this notion of a line of credit under section 15, because clearly the act does not suggest.... I guess FICOM is going to have some role to play in the administration of this, but it won't on a day-to-day or month-by-month basis. If sections 134(3) and (5) of the Financial Institutions Act will also apply, then there has to be some kind of sanctioned authority within this institution to review on an ongoing basis what those lending policies are going to be. I wonder what the minister's involvement is going to be on that, particularly in light of the fact that the institution is empowered to expand its capacity to lend on the basis of a line of credit under another section.
Hon. G. Clark: I'm sorry, I'm not absolutely sure what the member is getting at. Section 134(4) of the Financial Institutions Act says that investment and lending policy must be established under section 134(4). That should give members the comfort we were talking about earlier. This institution must qualify, the same as any other financial institution in British Columbia. It cannot lend or make investments unless it qualifies under the Financial Institutions Act, and there are very stringent qualifications.
The member is saying that there has to be a lending or credit committee. Yes, if it moves in the direction of lending -- and it's certainly not intended to in the first few years -- then, by law, I believe there has to be a committee of the board, a credit committee established by the corporation, to scrutinize those policies. Again, this simply says that this institution must follow the same rules as any other financial institution regulated by the province of B.C., by FICOM. That's the role of the superintendent.
G. Wilson: I don't know, but maybe it would be easier for me to pick this up under section 15. We'll deal with it there.
F. Gingell: I presume that section 13(3), which details the information required under the business plan, has been lifted from some other piece of legislation.
Hon. G. Clark: With the exception of (e).
F. Gingell: With the exception of (e) -- fine.
I would suggest that this section is outdated and poorly worded. It really is not in a modern tone at all. Subsection (d) refers to "a statement of existing and projected assets and liabilities." Clearly, one would need to have in the report the most recent monthly financial statement -- we're talking about something done during January, so it would either be for the nine months ended December or the eight months ended November, in order to have something that is current -- comparisons to budget, and a projection of what the financial position of the institution will be at March 31, in two months' time. One would need all those things and the budgets for the upcoming year. If the minister would allow this section to be stood down, we will come back with an amendment to it later.
The Chair: The agreement is to stand down section 13? All right, it shall be done -- I like to take on godlike periodically in the chair.
On section 14.
J. Weisgerber: I want to seek some clarification on section 14(1)(a). It appears that the corporation can borrow any amount of money. It says it can "borrow money...without limitation," subject, fundamentally, to the terms and conditions set by the Minister of Finance "at or before the time that the money is borrowed...." In discussions over the last few days, the minister has made reference to this as being a relatively modest undertaking. He has tried to assure British Columbians that the amount of taxpayers' money at risk here is going to be relatively minimal. We've been talking in the range of $100 million to $200 million in terms of borrowing and lending. But I see here that the corporation could do a volume of business many times that, subject only to the approval of the Minister of Finance.
Hon. G. Clark: No. The important thing here is the approval of FICOM. Again, this is similar to other Crown corporations, as I understand it, that have borrowing.... Whether it's B.C. Ferries, ICBC or any other corporation, the Minister of Finance is in control over borrowing by any of the corporations because of the obligations that accrue to the Crown. The Minister of Finance has to approve the business plan, through Treasury Board -- but more importantly in this respect, FICOM. There are very stringent rules governing financial institutions affiliated...to borrow, lend and invest money. This is similar to other Crown corporations in terms of their borrowing, except that there is another hoop, and that's a very stringent regulatory regime under the Financial Institutions Commission.
J. Weisgerber: Perhaps the minister could outline for us what those kinds of constraints are, outside of Treasury Board approval. We see here an institution with very few assets; indeed, an investment by the Crown itself of $5 million, in terms of share purchase, will enable the corporation to borrow $100-200 million, I am led to believe
[ Page 11860 ]
through some of the debate that has gone on here. Unless I have missed something, the borrowing of the corporation could continue to escalate in those same kinds of ratios by the addition of a relatively small number of share purchases.
Hon. G. Clark: No -- and I would be happy to get a briefing for the member. There are very stringent liquidity requirements under the Financial Institutions Act, and there are equity requirements. The ratio of equity to assets and the ratio of lending to deposits is very strictly regulated in this province. In fact, the member that that member supported for leader of the Social Credit Party brought in the Financial Institutions Act as a result of various serious problems with respect to the regulatory regime in Canada. FICOM and the Financial Institutions Act -- which, in retrospect, I am happy that I supported in opposition -- has put British Columbia at the leading edge of provincial regulations.
The reason for the $5 million in equity share purchase, which you might not otherwise need.... The only reason you need it and can't touch it is that under the rules that govern FICOM, there has to be a minimum equity purchase in the corporation. If the member is asking whether some future government could come along some day and put another $10 million in equity that would allow it to do other things, the answer is yes. But that's not envisaged, and I don't think it's required. We put the minimum equity purchase in. The advantage of the share equity is that the interest on the investment of that $5 million can be used for operating the institution, and that's part of the flexibility the corporation has. If you wanted to put more equity in, then it would give more flexibility to the corporation; so would putting more money on deposit, which would make more revenue from your investment side. It is important for the member to know that FICOM strictly regulates that, so you can't lend more money out unless you have certain assets that you can dispose of, etc. There is a mathematical formula with respect to your ability to lend money. That's a lot more sophisticated, but you get into that when you get into very complex lending arrangements and making sure that you have the equity base to take care of it.
[11:30]
In recent years -- starting with the previous government and Mr. Couvelier -- as part of a tougher regulatory regime, there was a requirement for credit unions to dramatically increase their equity portfolio. You may recall that many credit unions had to issue shares. Some of them, like Surrey Credit Union and Richmond, are actually listed on the exchange now. A lot of that is the result of a much tougher regulatory regime in B.C., and this follows that regime. So that's the purpose of the equity investment. Again, it's no more and no less. If the member is saying that if some future government so desired it could put more money on equity and therefore lever other activities, I guess the short answer is yes. But that's certainly not contemplated.
J. Weisgerber: What I'm having trouble wrapping my mind around is that the minister keeps going back and referring to regulatory agencies that are there and specifically designed to regulate commercial enterprises. We're talking about a Crown corporation. The shareholder is the Crown; the deposits are all guaranteed by the Crown. By passing a piece of legislation, we'll bring in a corporation that can borrow and lend money in the range of $100 million to $200 million, and we're led to believe that that is limited only by the actions of government itself.
I don't think it's reasonable to draw parallels between a Crown corporation and a public bank. These shares are owned by the public, and I see that the deposits are guaranteed by the taxpayer. Almost without exception, those ownership shares and guaranteed deposits are the only mechanisms that control the growth of this institution. That's the point I'm trying to establish. Whether or not you agree with it is another issue.
It seems to me that section 14(1)(a) says that this corporation may borrow money without limitation, subject to the approval of the Minister of Finance. The minister sponsoring the bill says that the formulas around the amount of money on deposit and the amount of share ownership in the bank are also limiting factors, and I say to the minister that those two factors are also controlled by the Minister of Finance. The Minister of Finance can, without any other action, dramatically increase the scope of the bank without ever having to come back to this legislation with an amendment.
Hon. G. Clark: First of all, that's not correct.
I want to make a different point. Going back to his premise at the beginning of his remarks, the member said that this is fundamentally different from a private corporation, and FICOM regulations, etc., are geared for private sector corporations. The member is correct. I want to be clear about this. This institution does not have to be regulated by FICOM. The member made all the points as to why it didn't have to be. The only reason it's regulated by FICOM is that we wanted to give comfort to the public, to the taxpayer, that it's going to be strictly regulated.
As the member may remember from his previous days as a cabinet minister, it's a bit like ICBC. There are very tough rules governing insurance corporations in the private sector. Why? Because some of them go bankrupt, and if they go bankrupt, then they have to have huge reserves to pay out. If you have a Crown corporation that is a monopoly by law, then do you need the same stringent private sector guidelines that are largely geared towards bankruptcy? Frankly, we try to follow them, and I don't disagree, but you can make an argument that you don't need them. Similarly, because this is guaranteed by the government and the government is regulating it, because Treasury Board is scrutinizing its business plan, because unlike any private banking institution it is being debated in a public forum, and because the depositors are guaranteed, why do we have to be subject to this huge regulatory apparatus of FICOM?
I don't want to betray any confidences, but many people in FICOM asked: "Why are we regulating this? This is completely controlled by the government; it's completely guaranteed. Regulations are there largely concerning depositors and accountability and reparations -- through CUDIC or otherwise." The reason is to give comfort to people like yourselves who are skeptical about this and to give comfort to the public that this is going to be more regulated than any institution in Canada, and it is.
So you've got it backwards. Because it's regulated by FICOM.... You've been arguing that the taxpayers are on the hook for it, and that all this is meaningless since we can do whatever we want. In fact, we've done the opposite. We have this more regulated than any other institution -- again, not because we have to, but because we want to, to make sure that there's some comfort.
To make one last point in that regard, we don't have to put $5 million on deposit in this institution. It might have been politically easier if I'd said in the House: "No, no, we're not going to put any money equity on deposit in this." We could have crafted the legislation so that there didn't have to be equity, because it was going to be controlled by Treasury Board, etc. But we're putting it in, and we're making it go
[ Page 11861 ]
through those hoops, in order to give people a high degree of comfort that there's extra regulation involved, that it won't be abused, and that there won't be a dramatic change in lending and borrowing practices. It has to go through the very stringent rules governing financial institutions, it has to go through Treasury Board, and it will be debated in the House. So I think that should give more than enough comfort to members opposite.
F. Gingell: I seek leave to make an introduction.
Leave granted.
F. Gingell: We are joined today in the gallery here by 28 grade 7 students from Pinewood Elementary School and by their teacher, Ms. D. Gatley. My original notice said that there were going to be 33 students from Pinewood. I just hope that they didn't start out with 33 students first thing this morning and lose 5 of them on the way here. I ask all members of this House to make Ms. Gatley and the 28 students that we do have here most welcome.
J. Weisgerber: Without trying to prolong this more than is appropriate, it seems to me that the regulatory mechanisms outside of government regulate the size and the scope of an institution based on its deposit base. This institution can dramatically increase its deposit base because of the guarantees that are provided by government. I think that's what sets it apart. It's why I'm concerned that the government doesn't in some way, by legislation, protect its future actions or at least ensure that the Legislature is going to be advised of any dramatic changes in the scope of the bank's activities.
Hon. G. Clark: First of all, it still has to maintain certain liquidity requirements, guaranteed by FICOM, which does limit its ability to act, although government could presumably take other actions -- like an increase in equity participation -- to deal with that. Second, I don't think the member should be too concerned that there are going to be hundreds of millions of dollars on deposit. Maybe I should be so wishful in my thinking. I think it is going to be very hard to get $50 million on deposit in this institution. Third, I want to make the point that the reason the Minister of Finance wanted control over which entities would qualify was to minimize the amount of liability ultimately to the taxpayers. I don't think there are going to be hundreds and hundreds of millions of dollars on deposit which would allow it to do hundreds and hundreds of millions of dollars more of business. It's simply not in the cards.
G. Wilson: I alluded to this before we stood down the previous section. With respect to borrowing, this is essentially a government entity by any other definition. I think that what would provide at least some comfort to the member for Peace River South, and to British Columbians generally, is if we were to provide an amendment to section 14. I would move such an amendment that reads as follows: "Subject to section 13 and subject to part 6, section 41, of the Financial Administration Act, the corporation may, for the purpose of carrying out any of the objects...." The reason I introduce this is that the section I refer to in the Financial Administration Act specifically deals with the government's authority to borrow money to lend to other government bodies, and it talks about the authority of government bodies to lend to government bodies. I think it's also important to recognize within that act that it provides restrictions with respect to the Minister of Finance in terms of reporting.
Interjection.
G. Wilson: We're talking about part 6, section 41.
I don't know if the minister might argue that this is implicit in the act -- it may be -- but I think it needs to be explicit in its description, because there are requirements within the act that the Minister of Finance must follow with respect to reporting, which I think should apply in this condition. Therefore -- if the minister will accept that as a simple amendment -- it makes explicit what ordinarily one might argue is implicit in the act.
On the amendment.
Hon. G. Clark: We try to make legislation as simple as possible. It's clearly implicit in the act. If the Minister of Finance and Corporate Relations has to approve borrowing.... This, by the way, has the same powers that exist in every Crown corporation. There's nothing distinct about it. It's boilerplate, for that matter, except that it's regulated by FICOM. We have exactly the same borrowing powers as any other Crown corporation, and on top of that it has to be regulated by FICOM. For the life of me, I can't see why we'd need to put in more hoops and language when it's absolutely crystal-clear that FICOM controls its liquidity requirements and lending and investment policies, and the Minister of Finance approves the borrowing the same as every other Crown, and all of that goes on the consolidated books of the province. All of it is there, and I can't for the life of me see why we need to refer yet again to another section of the Financial Administration Act when members know that the Financial Administration Act governs borrowing and lending practices. It is completely implicit and not required to be reiterated in this legislation.
G. Wilson: In defence of the amendment, I would argue that we've already seen, with respect to the applicability of other enactments under section 35 -- which we'll get to later -- that the Financial Administration Act is explicitly stated not to apply to the corporation. So I don't know that it is entirely implicit. When the minister says that this is exactly what happens between government and Crown corporations, that's exactly what the member for West Vancouver-Garibaldi was alluding to a few minutes ago with respect to reporting. Section 41 of the act indicates that notwithstanding the opportunity to borrow, to lend between government and government, the Minister of Finance is required to report. We're suggesting that this is a very simple way for the government to further regulate the Minister of Finance in taking moneys that may be loaned by government to this agent, in terms of a reporting procedure that can be dealt with.
[11:45]
Hon. G. Clark: I don't know what the member is talking about. Section 35 of the bill says that the Financial Administration Act applies in its entirety, with the exception of sections 6.1, 59 and 59.2. It's already covered by the Financial Administration Act with the exception of those three clauses, so to put into section 14 a reference to a specific clause in the Financial Administration Act when the whole act applies seems to me to be ridiculous.
The Chair: The point is well taken, I think. However, given that we have had the debate thus far, I'm certainly going to give the member an opportunity to say something further to the amendment.
[ Page 11862 ]
G. Wilson: What I'm saying here.... The out that I gave the minister is that this is implicit in the act. I'm saying that the wording should be explicit with respect to borrowing opportunities. It isn't just $2 million in guarantees that we're on the hook for. The proposition under section 13 allows the Minister of Finance and Corporate Relations enormous powers. It should be explicit that that section of the act will also apply under the borrowing powers. It is important that that be stated for the reasons that have already been addressed by the members for West Vancouver-Garibaldi and Delta South.
D. Mitchell: I don't want to belabour this point, but the minister's comments with respect to the applicability of other acts, like the Financial Administration Act.... Ultimately we will get to section 35, which he has referred to.
There are three sections that explicitly do not apply. It doesn't say that the whole remainder of the act necessarily does apply. Why would the minister not want to accept an amendment to section 14 -- a crucial section of this bill dealing with the borrowing powers of this new Crown corporation -- which simply says that the section of the Financial Administration Act dealing with the reporting requirements for the minister applies? It may be implicit, but it's certainly not explicit. Why not make it explicit with this amendment?
Hon. G. Clark: If we were to make it explicit in this case, there might be a legal argument that the rest of the act doesn't apply. The entire act applies. Why would we single out one section in one clause and move it in here, when later on we've only exempted the entire bill from three small sections of the Financial Administration Act? It's not English. It would be bad drafting to put a reference to one particular section in here and then later on put in a reference to three that are deleted. What are we saying, then, about all the other sections of the Financial Administration Act?
The Chair: It seems to me we have indeed canvassed this amendment at length. We've had the two sides presented. I don't think our interests would be served by protracting the discussion. I therefore suggest that we ought to have the question on the amendment.
Amendment negatived.
G. Wilson: We will come back to that in the applicability section. The minister might have to rethink some of his words on this, but the point that we are attempting to get at is that there is an opportunity for substantial sums of government money to be loaned into this institution without a proper public accounting of that procedure and of the moneys that are there. If the minister is saying that we're going to have this dealt with under those sections of the Financial Administration Act, fair enough. But the minister needs to talk about whether or not the borrowing powers would provide for this financial institution to seek from the Minister of Finance, or from the central revenue fund, moneys to be left on deposit, in the form of a loan that would be able to provide the kind of seed capital for this institution that might make it attractive in order to bring in the kind of pension investments that otherwise may not come forward.
Hon. G. Clark: I'm not quite sure what you're saying. Are you saying that the government could put money on deposit in this institution to help start it out so that it could then get more deposits? If that's what the member is saying, that is correct; the government could do that.
G. Wilson: The question is: would that be considered by way of a loan to the institution, or would it simply be seen as a standard investment out of the central revenue fund?
Hon. G. Clark: It would be seen as a standard investment which would be required by the Financial Administration Act to make a commercial rate of return. That would not be borrowing.
Section 14 approved.
On section 15.
D. Mitchell: Under section 15, reference is made to a line of credit for the new Crown corporation. Since the Minister of Finance is required to approve the terms and conditions of any line of credit, can the minister tell us what size of a line of credit is contemplated here for this institution?
Hon. G. Clark: We haven't contemplated a line of credit. We have just given it the ability to have one. Many of the smaller financial institutions -- credit unions and the like -- do work with larger institutions in their short-term borrowing, etc. So there are lots of arrangements among financial institutions today, particularly with respect to smaller credit unions, and this would give it that opportunity to do that also. But we haven't contemplated it, nor do we think at this point that it's necessary, nor is it in the business plan. It simply gives it the opportunity to make arrangements with a bank or credit union to help facilitate its transactions.
D. Mitchell: Surely the minister must have considered some guidelines for the terms and conditions that are going to be approved by the Minister of Finance and Corporate Relations in terms of the size of the line of credit that may be approved by the bank. Are we saying here that it's limitless? Are we talking about some demarcation or line of investment? Surely some guidelines must have been prepared with this legislation to offer advice to the Minister of Finance and Corporate Relations on the size of a line of credit that would be approved by the minister's colleague. Is that not the case?
Hon. G. Clark: No, the Minister of Finance determines what would be allowed with respect to line-of-credit arrangements, and that's really as it should be. Again, it's subject to the annual business plan approval by Treasury Board and to FICOM regulations. But if it were to seek a line of credit with another institution, because the government is the shareholder they are then into an obligation that falls to the government, and the person who manages obligations with respect to the government is the Minister of Finance.
D. Mitchell: When we dealt with the business plan in section 13, the minister told us that one of the reasons he was very reluctant to make any commitment to make public the business plan was that there might be confidential information in there. I was imagining that this business plan could be extremely detailed, but the minister has just indicated that the business plan that has been prepared so far doesn't even refer to temporary borrowing or to a line of credit. We're now dealing with temporary borrowing in section 15. The minister has told us that no limit has been planned for this institution when it comes to temporary borrowing. In effect, he is saying that the sky's the limit. The business plan does not refer to temporary borrowing or to a line of credit. What assurance can that give to the taxpayers who are funding this institution, when the temporary borrowing the agency will have statutory ability for after the passage of this act has no limits whatsoever? What
[ Page 11863 ]
assurances do the taxpayers have that this institution won't run amok with temporary borrowing and put itself into all kinds of trouble, when nothing has been contemplated in terms of limits for lines of credit or temporary borrowing? Can the minister offer us any assurance that there has been any thought given to this at all? Why do we even have this section in the act?
Hon. G. Clark: I was tempted to ask whether the member's long experience with BCRIC and Westar is why he's so concerned about borrowing, but I won't.
The draft business plan that members have seen, from Ross Montgomery and Associates, does not at this time contemplate a line of credit or borrowing in that respect. This is simply to give more flexibility to the corporation. It's not required in the business plan; we hope it won't be required. But, again, we're advised that from time to time smaller institutions seek lines of credit from larger financial institutions, and this would give them that opportunity, if it fits within their business plan and is approved by Treasury Board and the Minister of Finance.
D. Mitchell: The minister is quite right: my experience in the private sector with a company that became overburdened by debt is a very important reference point. We would not want to see this agency, where the shareholders are also the taxpayers of the province, also get into a situation....
Interjection.
D. Mitchell: In the case of BCRIC, we weren't dealing with taxpayers. The minister may remember that that was not a Crown corporation; it was a previous Crown corporation that was privatized. I'm not sure if the minister is giving us some kind of hint here that he's hoping for the eventual privatization of this community bank. I don't know if that's what he's suggesting here. But that's beyond the scope of this section.
This section deals with the temporary borrowing privileges of an agency that's funded completely by taxpayers. It would be irresponsible for us as legislators to approve this section of the bill, and to approve this bill, if we thought that this agency could get into serious trouble by having temporary borrowing privileges where there is no limit and no guidelines being offered whatsoever. I would ask the minister why we have section 15, dealing with temporary borrowing, which basically gives carte blanche to this new agency for any temporary borrowing, for a line of credit that has no limitation whatsoever. I would just remind the minister that in the credit cards he holds, there's a limit to the line of credit or borrowing privileges for individuals. There certainly is for the ones I hold. Shouldn't an agency of the Crown also have a similar limitation on its temporary borrowing privileges?
Hon. G. Clark: I just want to remind members that this is the same clause that exists for the Ferry Corporation and B.C. Rail, which allows for temporary borrowing, approved by the Minister of Finance. It's the same for all Crown corporations. I don't know why the member feels there is something nefarious in this regard. He has never mentioned the fact that all the other Crown corporations have the same ability, subject to approval by the Minister of Finance. Believe me, that's no small task.
G. Wilson: Maybe one small hint to the minister as to why this is different is that the B.C. Ferry Corporation, B.C. Rail and other Crown corporations are not financial institutions owned by the government of British Columbia for the provision of financial services.
Hon. G. Clark: No, they're billion-dollar corporations.
G. Wilson: That's true. If we look at the debt levels of those corporations and at the ongoing government subsidy and requirement for the provision of services, they are incurring substantial debt for the people of British Columbia which the government, and thereby the taxpayer, has to continue to pay up.
So we're creating a financial institution in which there is provision for a line of credit to be established with the initial approval of the minister, which can subsequently be expanded. Beyond that, it can be done "without further approval of that minister," it says in the language of this bill here. If that is not required to be provided in the business plan, then it would seem to those of us arguing against this that it would not be a responsible action for this House to approve such a provision for a financial institution until such time as that financial institution has proven it is competent to provide the services it was originally chartered to provide, so that it has a track record upon which some credit rating might be assigned -- as per anybody else who's seeking to get carte blanche, unlimited credit in this world.
F. Gingell: I'm really surprised that this temporary-line-of-credit arrangement isn't required to be included in the business plan. I would have thought the business plan would have given the parameters of the financing and would certainly have dealt with the ability of the institution to meet short-term cash needs. Section 13(3) says: "A business plan...must include (a) revenue, expenditure and borrowing proposals...."
Interjection.
F. Gingell: Oh, so I would have thought.... Okay, well, if that is the case -- these arrangements would be clearly stated, they could only be changed by changing the business plan that goes to Treasury Board and has to deal with the Minister of Finance too....
When I first read section 15(1), I wasn't sure whether we were talking about lines of credit that the bank would have in order to borrow money or with lines-of-credit arrangements that the bank would enter into in order to deal with customers, i.e., the bank making an arrangement whereby it would advance funds. If, when section 15(2) is read, you take them both as one, then it is reasonably clear. I don't have any objection to your putting the others in, but I'd just like your assurance that that's the case.
[12:00]
Hon. G. Clark: The member is absolutely correct. This provides the corporation with access to alternative avenues of additional short-term financing for its operation, if needed. However, it also ensures that the minister is informed of the requirement and is in agreement. There has to be an amendment to the business plan to make the case.
G. Wilson: I just seek a clarification, because some of our concerns -- some of them, not all of them -- may just have been.... On a clarification, then, is the minister now telling us that a line of credit and a further extension or change in that line of credit is, in fact, subject to the business plan and therefore subject to approval? That is contrary to what he was saying a few minutes ago.
Hon. G. Clark: I apologize if I inadvertently upset people. Yes, it is subject to the business plan and to amendments. I
[ Page 11864 ]
said it's not in the initial draft business plan which Ross Montgomery did for the government. There's no contemplation or requirement for it. But the member is quite correct, and the member for the Liberal Party is absolutely correct, that under section 13, which we've stood down, there is a requirement to list any borrowing, etc., in the business plan, and any amendments to that have to go through the Treasury Board process.
D. Mitchell: I just have one further question, then. Since the minister has now clarified this and there a reference to the line of credit in the business plan, would the minister agree to give direction to those who are drafting the business plan to place some limitation on short-term borrowing provisions or the line of credit -- simply because this Crown corporation is significantly different from other Crown agencies in the sense that it's a bank? In that sense, a line of credit is a pretty crucial feature of the operation.
Hon. G. Clark: Again, I'm sorry. I guess we were discussing at cross-purposes, because there will absolutely be a limitation on the line of credit in the business plan. That's what it does. There will be a specific ability. The legislation allows for a line of credit -- and there's no number in it -- but in the business plan, there will be a very specific requirement for what that would entail and what the Treasury Board would be asked to agree to.
D. Mitchell: I wonder what we're doing here in this committee. We've just taken up ten or 15 minutes of debate, and the minister has retracted what he said earlier. We've wasted a little time here.
Could I get back to my original question, then. My original question to the minister was: what will be the limit for the line of credit? Can the minister tell us what is being contemplated? What will the level for temporary borrowing be for this new bank?
Hon. G. Clark: This is where we got into the problem. In the original draft -- it's not really a business plan, but the business case for the bank by Ross Montgomery -- there's no reference to a required line of credit. We are now obviously reviewing a more detailed business plan, and at this point there still does not appear to be a requirement for any line of credit. So as part of the business plan, it will simply say no line of credit is contemplated at this time. I can't give you any further assurance than that. Obviously, when we go through it, some prudence and some short-term borrowing may be required in the business plan. But there isn't at this time.
D. Mitchell: I take it that the minister is saying there won't be any requirement for temporary borrowing for the first year of operation. However, in the bill we're being asked to approve in the committee today, section 15 -- which we're on right now -- deals with temporary borrowing and gives power to the bank for a temporary line of credit. Does the minister feel there should be a limit on that temporary line of credit, in terms of the amount they should be subject to? If so, what is it?
Hon. G. Clark: There will be a limit, and that will be set by the Minister of Finance. I don't know what the appropriate number is; that will be subject to discussion and debate by Treasury Board and the Minister of Finance.
D. Mitchell: The minister previously said other Crown corporations have no such limitation by the Minister of Finance; it's simply the Minister of Finance who determines that. Do the persons who contemplated the drafting of this section of this bill have any idea what the limit should be? Should it be $1 million? Is it carte blanche? Is it just "the sky's the limit"? Can the minister offer any range on what the limit for a short-term line of credit for this bank should be?
Hon. G. Clark: No, I can't.
Section 15 approved on division.
Section 16 approved.
Hon. G. Clark: I move the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
The committee, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. G. Clark: Notwithstanding what happens tonight in the hockey game, the House will be sitting tomorrow. With that, hon. Speaker, I move this House do now adjourn.
Motion approved.
The House adjourned at 12:07 p.m.
The House in Committee of Supply A; G. Brewin in the chair.
The committee met at 10:13 a.m.
ESTIMATES: MINISTRY OF GOVERNMENT SERVICES AND
MINISTRY RESPONSIBLE FOR SPORTS AND COMMONWEALTH GAMES
(continued)
On vote 39: minister's office, $350,717 (continued).
K. Jones: We'll start off with agencies, boards and commissions. I see we have commissioner John Pollard with us. Welcome to these sessions, John. I appreciate the cooperation we've had in the past with your ministry.
In keeping up with the appointments process, I wonder if the minister could give us a current update of how many additional appointments have been made since the last listing we received from the commissioner.
Hon. R. Blencoe: Yes, I believe you had numbers from Mr. Pollard sometime in March. He estimates -- we can give the exact detail -- around 100 since then.
[ Page 11865 ]
K. Jones: Is that 100 new appointments or 100 replacements or transfers? I notice that several boards have had most, or all, of their boards rescinded and have brought in new people.
[10:15]
Hon. R. Blencoe: That's a combination of brand-new and reappointments. Obviously with the brand-new appointment, some rescind, some go and some move off.
K. Jones: Could the minister tell us why there have been substantial changes of appointments that were made under the previous minister's mandate? Is there a reason for a whole board or nearly all of a board being replaced with new people?
Hon. R. Blencoe: First, if you want to talk about the membership of a specific board, you should reference the minister responsible; that would be more appropriate. I am responsible for the agencies, boards and commissions office in terms of a clearinghouse. As you know, the previous government was totally uncoordinated. But there are many factors for change. I don't get directly involved. All we do is administer this office, and Mr. Pollard takes requests from ministers and agencies to collect information. We have on file approximately 4,000 resumes from interested citizens who wish to serve, and we match up the need, talent, skill and geography. We're always very concerned about good geographical representation so that all regions of the province feel they are represented in the various agencies of government.
There are always changes with people coming and going. Obviously the orders are rescinded, and new people come on board. I can assure you that in terms of this minister there have been no wholesale changes. In terms of my ministry, appointments come up, we make appointments, dates expire and we reappoint.
K. Jones: I noted that there was one just lately. I think it was the second latest or the latest OIC which showed substantial changes to a board, where it looked like more business-oriented people were being appointed from the general business community rather than those who previously appeared to be appointed on the basis of their fitting the background. I noticed that an aboriginal leader was removed. Some other people had community roles rather than business experience, and they were changed. Could the minister explain to us why that change would have been made?
Hon. R. Blencoe: It's hard for me, without your naming the board, but if you find out the name of the board, agency or Crown, you should talk to the minister responsible for the makeup of that board about why there were changes.
I'm glad you picked up that business people are getting appointed. We appoint many people to boards and agencies, and business people are well represented in our boards and agencies because we recognize that we need their experience and talents. I suggest you find out the name of the board you're referencing and ask the minister responsible.
K. Jones: Could you just clarify this for us? My understanding is that the appointments were being made by the commissioner and his staff rather than the various independent ministries. Therefore it wouldn't be appropriate to ask the Minister of Health or the Minister of Social Services who they appointed, because these appointments are coming through your ministry.
Hon. R. Blencoe: Hon. member, there are appointments made through my ministry. If you have specific references to boards that I'm responsible for, like the B.C. Games, please reference those -- although I think we've already talked about that.
For the first time in government, through Mr. Pollard's staff, there's a coordinated mechanism to let people in the province of British Columbia know what agencies are required. We ask for their curriculum vitaes or resumes of their skills and talents, which indicate where they'd like to serve. If there's a vacancy in a particular Crown, agency or commission, Mr. Pollard through this office, which is in my ministry, provides the minister responsible with names of people who would fit the bill. Cabinet and the minister responsible would make the final decision; all we do is act as a clearinghouse for 4,000 resumes -- the number is growing daily -- of people wanting to be appointed and contribute to their province. If you have specific questions about specific areas, hon. member, you should take it up with the minister responsible, which I'm sure some of your colleagues have already done. We are a clearinghouse.
K. Jones: I accept that you're a clearinghouse. Does that mean that your ministry and this particular branch of your ministry don't get involved in making recommendations for appointments? Is this something where people can submit their interest in a particular commission, apply for the job and then get on a list of considered parties? What is the process by which people get appointed to these commissions and boards?
Hon. R. Blencoe: Hon. member, I think I've already given it to you. We let it be known right across the province that within my ministry is the agencies, boards and commissions branch, with Mr. Pollard as commissioner. He's responsible for coordinating applications of people who want to serve their province in various capacities. As you know, in British Columbia we have 3,500 people serving in many capacities. That takes coordination. We're looking for the right people.
Despite what the opposition may say, hon. member, we sometimes have to go out and find the right people, because some of these boards are very important to the province and to what we do.
This commission is coordinated. It accepts resumes, it has a cataloguing system, it has it down in terms of what Mr. Pollard knows or what the government requires for agencies and corporations and it knows when the times are coming up. It has developed a very sophisticated way of handling appointments.
Let me give you an example. Ministry A has a certain board that has statutory requirements, and this board is appointed by cabinet. Mr. Pollard knows, or the minister's staff will let Mr. Pollard know, that the appointment's expiry date is coming up. We need three or four people in this particular area. The ministry and the staff know from over the years what type of person is required, so that's already in the system in terms of the kind of person being looked for by Mr. Pollard. His staff then look at the computer system, go into the cataloguing and match up requirements. Names will go forward to the minster and to cabinet in terms of the requirements. As you know, the recommendations are then made. If people are interested, then we try as much as possible to put their names forward -- they're in the system. As I say, we have 4,000 resumes on file, and the vast majority of people that have been appointed to boards simply want to serve their province.
[ Page 11866 ]
Some have a profile and have achieved notoriety; that always happens in this business. But the majority of the folks that serve -- I emphasize the majority -- are people who want to serve their province. Mr. Pollard suggests 3,500. I suspect there are a few more who simply want to contribute, and for the first time we have a mechanism to coordinate that in an effective way.
K. Jones: What process has the minister got in place to keep patronage out of the process?
Hon. R. Blencoe: I've already said that the majority of people who come to us just want to serve their province, and a majority of citizens have no connection one way or another, past or present, with any political party. But if you're suggesting -- and I hope you're not....
I suggest to you that this government appoints people of all political persuasions. Mr. Mel Couvelier serves this government. Bev Christensen serves this government; she's a former Liberal candidate in the 1986 provincial election. Marguerite Ford serves this government; she's a prominent Liberal and a former Vancouver city councillor. Henry Block, a prominent Socred fundraiser serves this government. Michael Francis, a prominent Vancouver Tory with NPA connections serves this government. Ron Fitchner, he's a Progressive Conservative who is treasurer of the Prince George-Bulkley Valley Progressive Conservative Riding Association and has been reappointed to the Simon Fraser University board. Don Amos, chair of the board of directors of Camosun College and the founding president of the Reform Party of Canada, serves this government. He lives in Saanich.
There are people of all political persuasions. Most people do not attain notoriety in terms of political persuasion; they're there to serve. I recognize the opposition's job and what they're here to do, but most people, frankly, want to serve. Everybody quietly has their political persuasion, but we're looking for people with talent, and most of those we appoint are serving the province in a distinguished way.
K. Jones: Hon. minister, I hope that list you've got now is a list of NDP appointments.
Hon. R. Blencoe: I don't list them by that.
K. Jones: You've identified -- and it seems that your ministry identifies -- people by their party affiliation, and it's obvious from what you've just stated that we must know who the prominent NDP appointments are. Could you give us a list of the prominent NDP appointees who are currently in major positions in these agencies, boards and commissions?
Hon. R. Blencoe: I forgot to mention Mr. Gordon Gibson, who's associated with the Liberal Party of British Columbia. He was appointed to the B.C. Trade Development Corporation.
K. Jones: Is he still there?
Hon. R. Blencoe: As far as I know, he is.
K. Jones: He resigned.
Hon. R. Blencoe: Okay, he resigned from the board to run for the Liberal Party leadership. We put him there, and we showed....
As for a list of New Democrats, I don't keep one, hon. member. That's for you to distort. But I can assure you that people who come forward to serve this government believe this is a good government. They want to serve the interests of this government and are proud to do so.
L. Fox: I find it amazing. According to what the minister suggested earlier, there were some 3,500 appointees, and he managed to find eight, nine or ten, whom I didn't count, with party affiliations other than his own.
I can suggest that we haven't seen patronage in the history of British Columbia in the form we've seen it in since '91. If the minister and this government truly wanted to look after the best interests of the people and they truly wanted to find people who have the expertise to perform extremely well and add to the well-being of British Columbia irrespective of what political philosophy they come from, then they would use a select standing committee or an all-party committee of the Legislature to recommend people based on expertise and knowledge. Those could be seen to be appointed for what is truly in the best interests of the province rather than from a political bias based on their political philosophy. Why doesn't the government look at using a select standing committee to do the interviewing and a lot of the selection from the 4,000 names he said he had, rather than using the typical political process that we've seen misused by this government?
Hon. R. Blencoe: That's like the member sitting in a glass house and throwing rocks at the glass. His former party's government ran the biggest patronage machine in the history of this province, and he knows it.
[10:30]
We have a system that's open. We have a commission, and we're open for resumes. It's all open in terms of appointments. We have a resume system and a cataloguing system, and people have the opportunity to come forward. We're appointing not on a partisan basis but on ability. I'm the first to admit that people of New Democratic persuasion get appointments, but there are people of all political persuasions. The best way to avoid the accusation of patronage is to make appointments known to a wide range of people, and people in British Columbia know we have this system and that we have 4,000 resumes on file. We approach it in a very systematic way.
L. Fox: For the record, I wasn't part of any previous administration, and the minister knows that very well. Although I was on the BCBC board, I was appointed primarily because of my municipal experience and business experience, not because I had an affiliation with any particular party.
The member for Skeena here will attest to the fact that very few mayors exhibit any bias toward any political party. In fact, they keep their politics very close to themselves. In one or two organized cities they may have a party affiliation. But the rest of the mayors, particularly in the rural parts of the province, do not disclose their political affiliations. They would be unknown by any political party, I would suggest. I wasn't chosen on that basis. I was chosen because I could add an element of information to that board, and that's the way it should be.
Unfortunately, I guess what happens is the image -- and there is that image -- of this government having the worst record in the history of British Columbia with respect to patronage. I mean no disrespect to the individual sitting beside you; I'm sure he's a very capable individual. But when you have the head of a patronage appointment process, who
[ Page 11867 ]
actually has a very close affiliation with your party, obviously that in itself sends a message to British Columbians. I want to reiterate once again that if we're ever going to get around the idea that the party in government is appointing people who are sympathetic to its philosophical bent, then we have to do something which involves all parties in the Legislature and does away with that process that's very apparent with this current government.
Hon. R. Blencoe: Hon. Chair, I think it's ironic that when this member's former party was in office -- for I don't know how long -- it did nothing in this area. We have an open process, and it's available to everybody. Obviously people of all political persuasions will get appointed, and we have demonstrated that. If you want to go through any of the boards and take a look at some, you can see there is a good representation from all sectors. Quite frankly, you do a disservice to the system in terms of condemning it, but I understand the objectives of the opposition in this area. For the first time in the history of this province we have an open system. It's coordinated, resumes are asked for, and people of all political persuasions, both genders, visible minorities, aboriginal peoples, and labour and business are represented. We're trying to bring all the various components of this very diverse province into our representative system.
[S. O'Neill in the chair.]
K. Jones: We recognize that you have appointed various representatives on these commissions, boards and agencies, but that wasn't something you did exclusively. I think the previous government had appointed various representatives from the community as well. I agree that both governments have been very blatant with your patronage. You really have the majority of the controlling positions filled with key people who have your philosophical beliefs, and that's certainly not an open process. I recognize that the person who does the job is very competent and has set up a system of keeping track of it.
Perhaps rather than, as was suggested by the Reform member, a select standing committee of the Legislature making these appointments -- that would be almost impossible to accomplish because of the number of appointments that are required to be processed -- it would have to be done by some officer. It probably should be an officer of the Legislature, similar or in the same status as the ombudsman or the auditor general, who is independent of any government agency or ministry and therefore would have the confidence of the entire House in those appointments.
The other item that perhaps the minister has not.... He's talking about it being an open process. Could the minister tell us when the last time an opening on one of these commissions, boards or agencies was ever posted? If we were to really have an open process, we would have these openings posted so that any of the public who might be interested or qualified in that area could submit their names if it was appropriate for them to do so at that particular time.
Hon. R. Blencoe: Yes, that's a good suggestion. We are doing some advertising, and I think we need to promote more. We've got 4,000, but I think we can do more in that area, and we're working on it. There may indeed be some changes down the road in terms of these issues.
K. Jones: Having the assurance from the minister that there's likely to be some revisions to make this process even more open, we'll move on to the area of B.C. Systems Corporation. The latest annual report of the B.C. Systems Corporation that has been tabled in the House is for 1992-93. Is that correct?
Hon. R. Blencoe: I'd like to introduce Ted Evans, president of the B.C. Systems Corporation, and Mr. Gerry Gabel, vice-president of the Crown corporation.
In answer to your question, hon. member, yes, the 1992-93 annual report was the last one.
K. Jones: I welcome both the president and the vice-president here.
I'd like to ask the minister if there have been any major changes in policy objectives between the time this report was published and the current time?
Hon. R. Blencoe: No, although B.C. Systems Corporation is a very entrepreneurial corporation and is always looking to make improvements within its current mandate.
K. Jones: Could the minister tell us what improvements are currently being made to change that mandate?
Hon. R. Blencoe: My comments were general in nature. Obviously B.C. Systems is a corporation that does much work for government in terms of communications and information technology. We are in a new information technology world, and obviously B.C. Systems is looking for ways to improve its services to ministries and to other agencies it works for. Hon. member, to some degree you're reflecting on future policy, but there's no question that B.C. Systems has a future in terms of working with the private sector. We are in an information technology world, and we think there are opportunities to work with the private sector to make British Columbia far more competitive in these kinds of areas.
K. Jones: With regard to some of the basic objectives outlined in the annual report, could the minister tell us if those outlined and shown here as results have progressed further, and to what extent have there been major changes to the results part of these objectives?
Hon. R. Blencoe: Policy objectives are on page 7. From 1992-93 the results, which I don't think we need to go over, are laid out. Major objectives for 1993-94 are on page 18, and there will be reporting out, in terms of results, in the next annual report. Unless you have any specific questions, please go ahead.
K. Jones: Keeping to those objectives, hon. Chair, one item was to maintain the debt equity ratio below 2 to 1. It was actually 1.3 to 1, which was the objective last year in order to maintain the debt equity ratio below 2 to 1. Since you were down to 1.3 to 1 this past year, why haven't you reduced that further to reflect the fact that you were already at 1.3?
Hon. R. Blencoe: We are going to report out that the debt to equity is much better than planned -- 0.6 to 1 -- and we have achieved a profit of $11.8 million and a net profit of $9.3 million.
K. Jones: You're saying for 1993-94 you have a debt equity ratio of 0.6 to 1, yet you still maintain the objective to have the debt equity ratio below 2 to 1. Why haven't you brought
[ Page 11868 ]
it down to reflect the fact that you are operating at a much lower level so that your objectives should be realistically within what you're operating?
Hon. R. Blencoe: Setting levels is like the Ministry of Finance setting levels of investment and targets for the year:.you do your best. The figure is much better; that's what we thought we'd do. The performance of the board, of which the Chair is a member, has been extremely good, and we've come in below the 2.2 to 1.
[10:45]
Rather than dicker over what we expected, based on what was happening in the industry, I think we should take great comfort that this corporation is financially sound, well run and is returning a dividend to the people of the province. I know the corporation quite well; the people there are very dedicated to their work and know that they have an important job for the people of the province. At the same time they are very responsible financially, and they return good value to all of us.
K. Jones: If it makes a return to the government, it certainly seems to be something of a gem in the line of the government's processes. But since this agency really just takes money from other government ministries, it's taking out of one pocket and putting it back into the other. Depending on what rate they charge -- and it looks like there's no competitive process for the rate-setting -- B.C. Systems Corporation can always be a profit-making operation. The ministries can't turn to somebody else to get their business if they feel that the price the corporation is charging is too high.
Hon. R. Blencoe: You can obviously make whatever comments you want, but my suggestion is caution. Whether you know it or not, the ministries can take their business elsewhere; they're free to do that. We compete in our requests for proposals all the time, and we have to compete. That's the mandate clearly laid out in the B.C. Systems Corporation.
I ought to let you know that B.C. Systems has been very successful as a commercial entity, and I want to put this on the record. It has been profitable for each of the last nine years, and it has reduced its debt from $60 million in 1985 to $26 million in 1994. Over the same period the corporation has, in addition, acquired $220 million in capital assets, using internally generated cash. Since 1985, B.C. Systems has accumulated retained earnings of $43 million, and since '89 the corporation has paid $18.8 million in dividends to the government. Not only does it serve well, but it's in good shape financially.
You have to remember what B.C. Systems does for government. It's a key component in a modern operation of government. We work extremely well with the private sector. There are lots of examples where we have partnered up with small companies that are just starting in the field, and they work with us. We give them more leverage into the private sector, and they build on that and do extremely well. Much of the direction the government has given is that we want to do more partnerships with the private sector.
We have lots of talent and experience in one of the best systems corporations in North America, and that is recognized. There will be some recognition of that fact in the very near future. I can say that, but I can't give you details.
K. Jones: The indication of future thinking as indicated by the minister is perhaps along the lines of privatization of the B.C. Systems Corporation. That has certainly has been recommended in studies the minister and B.C. Systems are aware of. Is that the direction the minister is talking about?
Hon. R. Blencoe: Much of what you're talking about is future policy, but I think you recognize that governments are always looking at their operations and taking a look at where we should be going. The government believes that B.C. Systems is too important to us in terms of government needs, but it also represents an opportunity for us to develop a dynamic mixed public-private system that builds on the strength of the public assets, the private sector and B.C.'s high-tech entrepreneurs.
Quite frankly, we are doing that. B.C. Systems is no secret as a leader in North America. We have countries from all over the world seeking our advice and expertise. In the very near future, I'll be making an announcement that will show that B.C. Systems is on the world map in terms of the issues they cover in their mandate. We think it's important for government to be a leader with the private sector in these kinds of issues, and many governments across Canada have divested themselves of their systems. Now that the information highway -- the technology and all those things -- is happening, the public-private initiative is here to stay. It's a major factor. Many of those administrations, though they won't say it, probably regret getting out of the business in terms of having their window into the industry and the way of the future. We need to be there.
I also want to let you know, hon. member, that at present B.C. Systems gets about two-thirds of the ministry's business. It's important to note that of the business coming from B.C. Systems, 50 to 60 percent flows through to the private sector for equipment, software, telecommunications lines and consulting services. If the hon. member or anybody else would like to visit and get to know what the corporation does in the private sector, I think they would be fascinated by the kind of work we're doing there. As I say, I think that in the next few years you're going to see some very exciting things through this corporation linking up with the private sector. It's an incredible asset that we need to build upon. We have all sorts of entrepreneurial abilities there, and we are going to work on that.
K. Jones: From what you say, I get the impression that BCSC is currently seeking a redefinition of its mandate. It's changing its mandate from being a servicing agency to Crown ministries to actually being a competitor with private industry in the telecommunications marketplace and is trying to get involved in the information highway that is imminently in front of us. Most telecommunications companies are in the process of doing major expansions into fibre optics, telemetric processes and data transfer systems, and through those expansions we will very shortly see a whole new world of telecommunications, which is euphemistically referred to as the information highway. That's a combination of video, data and voice mixtures combining to provide a broad-band type of service. Where do you see B.C. Systems in regard to this in the coming year?
Hon. R. Blencoe: We will obviously continue to be the major provider of systems to government, but we will also continue to look for opportunities to work in partnership with the private sector.
As I've already referenced, B.C. Systems has a national and international reputation as a leader in providing information technology, and it's considered to have the best public sector telecommunications network in North America. There's no question that the private sector knows
[ Page 11869 ]
there are some great opportunities to work with us in terms of what we've developed, so we can help the private sector as well. We're looking at some really incredible private-public initiatives in the year ahead that will benefit everybody. Obviously the major job is still to service government, and we will continue to do that. It makes sense to look at the entrepreneurial ability and expertise that have been developed there over the years, and as a technological innovator we can partner up to develop that asset for the good of all sectors interested in information technology.
K. Jones: Could you tell us how much money is allocated to make this change within the current budget year?
Hon. R. Blencoe: Maybe you could tell me what change you're referring to.
K. Jones: The changing mandate that you're describing -- I got the distinct impression it's going to occur this coming year. It should be in the budget for this year. What provisions have been made for that? It will probably have substantial changes in staffing requirements. It will obviously want to grow.
Hon. R. Blencoe: There is no mandate shift; we're working on the existing mandate. We have a mandate to work with the public sector and provide leverage and opportunities for them in many ways. We have a list of companies that we've helped. Shortly there will be another announcement by the Systems Corporation and me. You will see that we are going to work within our existing mandate. It makes a lot of sense to use the skill, the innovation and the technological development, which is second to none in North America, to work with the private sector. There is no allocation of budget for mandate change. The corporation is on full-time notice to look for opportunities to be more entrepreneurial with the private sector and help them. We continue to do that.
K. Jones: Could the minister inform us how he rationalized the information services staff that is seconded to various ministries doing computer programming work?
Hon. R. Blencoe: For a long time B.C. Systems has provided secondment staff to work on-site in the ministries for their systems requirements. I think you know that; I'm not sure what else you want to know. These employees are B.C. Systems Corporation staff that are seconded. Some of them have been there for many years. That's how the current system works, hon. member.
K. Jones: I've had the opportunity to talk to a few of those persons who are seconded, and they never even see the B.C. Systems Corporation. They were hired by and report directly to the ministries' operations. All they get from B.C. Systems Corporation is a paycheque. They never have any relationship to the B.C. Systems Corporation. They don't even have a standards process under the B.C. Systems Corporation for their work. They take direction from the ministry and the ministry management, so they're paper employees as far as B.C. Systems Corporation is concerned. Could you explain why that would be?
[11:00]
Hon. R. Blencoe: I beg to differ with you. They are connected with the B.C. Systems Corporation. They come in to meetings for updates and standards qualifications on new approaches; they are connected. I know they report to the ministries. I guess when you've been there a while, there is a sense of wondering if you are a ministry employee or a B.C. Systems employee. That's been there for some time. There may indeed be a debate between the ministry and the B.C. Systems Corporation. I don't intend to get into that debate today. If there are issues around that, there are processes beyond what I'm involved in that will resolve those. Currently they are seconded from B.C. Systems, and generally it's worked well. There are always suggestions for change, and those will be looked at by those who make those decisions.
K. Jones: Could the minister tell us exactly how many people are involved in this secondment? I think they must make up almost half the workforce of the B.C. Systems Corporation.
Hon. R. Blencoe: Approximately 400.
K. Jones: So 400 out of 1,200, a third of the employees, are not really working for B.C. Systems. They're just on the books of B.C. Systems. Is this to hide the FTEs from the ministry's books so that it looks as if they have fewer employees? Or is it because B.C. Systems wants to justify its existence and look good by contracting these people out to the ministries so as to gain more revenue?
Hon. R. Blencoe: Your question in terms of FTEs is better referenced to the Minister of Finance, who is responsible for PSERC.
I'm not hiding any numbers. B.C. Systems numbers are known, their staff have expertise and they work for the ministry. That's the way it has been there for a long time. There may be some debate within the ministries and B.C. Systems, but that's nothing new, either.
K. Jones: As the minister responsible for B.C. Systems Corporation, you are the one who is accountable for this use of staff. Could you explain to us exactly why these people are on the staff of B.C. Systems Corporation when they're actually doing their work for line ministries? They do not do any work whatsoever for the B.C. Systems Corporation.
Hon. R. Blencoe: The member is trying to make a big issue out of it. You should know that customers are not compelled to staff their information system branches with B.C. Systems people; it's a matter of choice. I can assure you that the reason that they choose B.C. Systems people is because they do a good job for the ministries. You can say what you like, but the ministries don't have to use the staff of B.C. Systems Corporation.
K. Jones: Could you tell us under what policy guideline your ministry, for example, is able to hire off-the-street computer programmers?
Hon. R. Blencoe: I can't reference exact policy, but the ministries have full capacity to hire in the areas where they require staff, although it's difficult at the moment because we're in a hiring freeze. In terms of the issues you raise, most ministries decide to use B.C. Systems staff who know the systems of government well.
K. Jones: The minister has brought up an interesting thing. When did the hiring freeze come into play?
[ Page 11870 ]
Hon. R. Blencoe: I don't know the exact date when it came into place. The Ministry of Finance is the one responsible, but I think the hiring freeze may be off at this time -- I'm not sure.
K. Jones: This government has been having an off-again, on-again hiring freeze for the past year. They might make sounds about a hiring freeze, but then they keep putting out job postings. Issue 19 was issued on June 3, issue 18 on May 27 and the latest one, issue 20, was put out on June 10 of this year. I very much doubt if that constitutes a hiring freeze, especially considering we've got about 12 pages of jobs being posted. That's a pretty substantial hiring freeze. Obviously it's not very effective.
L. Fox: I just want to ask a quick question to clarify one point. It's my understanding, given the conversation, that these seconded employees receive their paycheques from B.C. Systems. How is B.C. Systems remunerated or repaid for that cost? Is it a percentage over and above the actual paycheque cost, or is there a margin of profit for B.C. Systems in that secondment?
Hon. R. Blencoe: The current formula was reviewed by Treasury Board, and it was deemed to be a break-even, given the benefits, training and human resource issues that have to be covered. The formula is 1.46 times the base salary.
L. Fox: I would assume that the 0.46, which appears to be the percentage over and above the actual paycheque cost, would include the benefits. Would those benefits be consistent with those of the BCGEU employees in the ministry?
Hon. R. Blencoe: Yes, Mr. Evans tells me that they generally parallel the government.
K. Jones: Going back to the job postings again, the minister would probably be enlightened to know that in issue 20 of Postings, there were actually 96 job postings. That doesn't sound like a hiring freeze to me. As of June 10, it's certainly full steam ahead.
Could the minister tell us how much of the revenues of BCSC come from government agencies?
Hon. R. Blencoe: I'm told that about 90 to 93 percent of its revenues are generated from ministries.
K. Jones: The study done for cabinet says that actually 96 percent of B.C. Systems revenues come from government. You are probably aware of that study. You've indicated that these seconded employees are getting a higher return than regular employee doing the same type of work in other ministries. Could the minister explain why that occurs?
Hon. R. Blencoe: Maybe you can clarify what you mean by higher or more. Are you referring to the 1.46 I mentioned?
K. Jones: Yes.
Hon. R. Blencoe: That includes benefits, training and human resource issues. Treasury Board staff have done a review of that, and they basically say that it's break-even and cost-recovered, that it's acceptable and it makes sense.
K. Jones: Further to that statement, the report of the study of B.C. Systems done for cabinet states in reference to these persons seconded to government ministries:
"The latter already are an issue, since they receive higher salaries and better benefits -- e.g., training -- than individuals in similar positions who are employed in the regular public service. Even without the dismantling of B.C. Systems Corporation, the question of bringing these positions into government would have to be addressed."
Hon. R. Blencoe: If you are referring to persons in B.C. Systems Corporation being paid a higher salary and there being discussion about that, you are correct, hon. member. That will have to be resolved by government.
K. Jones: How can you justify paying two people in government agencies different amounts for the same job? You're the government that advocates pay equity -- equal pay for equal work. Here is a prime example of one agency of your ministry paying people more because they happen to be seconded out to ministries, while at the same time other people doing the same work within your ministry are getting paid less. How can you justify that? You should be taking a very great interest in this. It's one of your fundamental philosophical approaches.
Hon. R. Blencoe: We are taking great interest in it, but there are processes and collective agreements and bargaining units, hon. member. I know the Leader of the Opposition would probably do away with those fair and just processes, and we recognize that. We'll work on it and find a resolution, but we'll do it fairly, not in the Liberal way, which is to use a two-by-four.
L. Fox: Obviously I'm not privy to the talks between BCGEU and government, but it's my understanding that that particular issue is certainly on the table and will be resolved, I suspect, in an acceptable way, if not one with which both parties are totally satisfied.
But tell me: which union represents the B.C. Systems Corporation employees?
[11:15]
Hon. R. Blencoe: They're both BCGEU, with different bargaining units; you're absolutely correct, hon. member. You have the process down right, and you know exactly what's happening.
K. Jones: The member for Prince George-Omineca brought forward a good question. I'd like to ask the minister what union these seconded people are under. Are they under contract, or are they under a union?
Hon. R. Blencoe: They're BCGEU. I'm told that the majority are BCGEU but a few are secluded -- excluded -- from management positions. Secluded. Excluded.
K. Jones: Proof positive. Does the minister mean cloistered? Perhaps a fair number of people are on a contract basis -- as you say, excluded. The ones that I've met were able to negotiate their own contracts and are actually consultants as far as they're concerned. They're working through B.C. Systems Corporation, but they never really set foot in B.C. Systems Corporation. There's no standardization of their operations, and there's no direction of the process that they work under. They are totally independent, but they work full-time for a particular ministry.
[ Page 11871 ]
Hon. R. Blencoe: The secondments I referenced were all employees of B.C. Systems. What I did say was the majority, nearly all, were included. There are some excluded management positions. I don't have it, but we can get that exact number for you.
K. Jones: Could the minister tell us what the financial implications would be if the government were to privatize the operations of B.C. Systems Corporation?
Hon. R. Blencoe: That's future policy.
K. Jones: It may be future policy, but it's already in the documents that have been given to you. I happen to have the same document in my hand. So you wish to say that it's something you're going to do in the future when we look at the financial implications of its potential sale?
Hon. R. Blencoe: I think the Premier and I made it quite clear that the government, particularly during budget time.... The document you referenced is a very brief document. Treasury Board, which I am a member of, when we are doing our budget during difficult times and looking for ways to curtail expenditures, we have a myriad of issues that come before us in terms of possible opportunities for reductions and service or program eliminations. That's part of our job. We take months to do it. The Premier made it quite clear that that option -- that very short paper, which was part of the budget process -- was rejected. We believe B.C. Systems Corporation is a partnership -- an entrepreneurial kind of partnership that we fully expect. A sign of that is that I will be making a substantial announcement very shortly. We believe there are incredible opportunities for B.C. Systems Corporation to work with the private sector and look for new job opportunities. We think there are hundreds or even thousands of new job opportunities in this new age, and we think government needs to maintain its ability and its edge. I've already said that we are the leader in public sector information. We'll be demonstrating that very shortly.
Going back to the document you have, when you're doing budget in government, you look at a 101 opportunities and options. The Premier has made it quite clear that we're looking to partner B.C. Systems Corporation to develop our options for a mixed public-private system that will build on the strength of our public assets, the private sector and B.C.'s high-tech entrepreneurs. That will be our direction.
K. Jones: Is the minister aware of the telecommunications arm of B.C. Rail?
Hon. R. Blencoe: Are you referring to Westel? Yes, I'm aware of it.
K. Jones: Is the minister also aware of some plans to integrate Westel's operations with the Rogers group and Ameritech, the American telecommunications company? Are there possibilities that those could be tied together with the B.C. Systems Corporation in an alliance arrangement?
Hon. R. Blencoe: I have no dealings with Westel.
L. Fox: I want to go back to a statement of the minister a few questions ago. I think his words were that he's going to be making a major announcement in terms of how they're going to joint-venture with the private sector in the future. That's encouraging. One question that came to my mind at that point -- and I understand I'm walking a fine line here -- is whether the minister envisions B.C. Systems Corporation competing as a monopoly or in the open market on an even keel with the private sector?
Hon. R. Blencoe: No, we're very conscious that the private sector also has abilities, systems, entrepreneurs and good companies. We're looking for niches for us to work with them. There are some great success stories with small companies in this area. I have names of ones that want to get going; we've given them opportunities, support, contracts or expertise. The short answer is no, we don't anticipate direct competition; we're looking for partnerships. We think there's far more benefit in a convivial arrangement where both sides feel they're doing it together. We've used our expertise in what we've done in the public sector. I also think that the general knowledge we've achieved in information technology enables us to work with the private sector for opportunities that are both public and private initiatives and partnerships.
K. Jones: Could the minister tell us what role B.C. Systems Corporation is playing in the establishment of a fibre optic network in the province?
Hon. R. Blencoe: I took a little longer to answer because I want to be sure this makes sense, and that we have it correct. I want to make sure you fully understand that B.C. Systems is not building a whole independent fibre optic system separate from the private sector. We buy or lease what we need from the private sector, and B.C. Tel is major in that. There are some times -- when we serviced this Legislature building, for instance -- that we may have to do our own cable within a building, but 99 percent of our work is utilizing the private sector fibre system, and we certainly do not anticipate that to change.
K. Jones: Could the minister describe what is meant by the electronic bus?
Hon. R. Blencoe: The what?
K. Jones: Electronic bus.
Hon. R. Blencoe: Hon. member, I have no idea.
K. Jones: An electronic bus is computer-mediated instruction for home-school students put on by the Open Learning Agency. I understand that B.C. Systems Corporation is involved in providing some facilities for that.
Hon. R. Blencoe: We work with that great agency, the Knowledge Network, in providing some services, but we're not familiar with the term you are using. We will take it on advisement, and if we can reference it, we'll let you know. I'm learning all the time, like a computer.
K. Jones: Yes, I think we'll step this one down and proceed to government air services. Could the minister tell is if he was involved this weekend in meetings with Government Air staff with regard to the question of the shutdown of government air services?
Hon. R. Blencoe: I did not meet with Government Air staff on the weekend.
[ Page 11872 ]
K. Jones: Did the minister meet with some members of government air services this past week with regard to the question of the shutdown of government air services?
Hon. R. Blencoe: I met on a number of occasions with union representatives at Government Air to discuss issues of mutual interest in terms of the closure of Government Air; I've made no secret of that. Yes, I've met.
K. Jones: That's all I was asking, whether you'd met with them.
Hon. R. Blencoe: Yes, but not on the weekend.
K. Jones: I wasn't expecting it to be any secret. I just wanted verification that meetings were going on with regard to finding other alternatives. Is that what it is? How is it going to work? How are government air services going to be privatized? Are they just going to be contracted out? Have you let tenders yet for contracting it out?
[11:30]
Hon. R. Blencoe: Very simply, we're closing Government Air. We have made that known. The union knows it, and they are on notice of that. The announcement was made in the budget that there no longer will be cabinet travel on Government Air, and that is fully anticipated. The winding down is in progress, and Mr. Peter Clark is here today as part of this. That's the policy, and there's no change to what was announced.
L. Fox: I have a number of questions on the whole issue of shutting down Government Air. In reviewing some of the information available, it seems to me there are a couple of things one has to consider with respect to the shutdown.
I know that the northern communities are extremely concerned about the privatization of the air ambulance portion of this. You may even have received some letters; I know the Health minister has. A number of community leaders have also called me on this.
The first question I have to ask the minister is whether, in the deliberations about the shutdown of Government Air, there were other options for the ambulance portion, such as looking at putting it under the Health ministry or another agency. Were those other options examined? I'll just leave it at that, and then I'll continue.
Hon. R. Blencoe: In terms of the ambulances, all ambulance service was coordinated and run by the Ministry of Health. You could talk to that ministry specifically about the air ambulance service. We provided the planes, but only about 40 percent of all requirements. You know the system. Sixty percent of the planes that actually carried the paramedics were private sector ones.
I want to make it quite clear that the Minister of Health can talk to you about the paramedics who are currently riding on the planes, in whatever form -- but the paramedics still exist. There has been some concern in the community that we were eliminating the concept. I can understand that because it came out that Government Air is going and Government Air runs the air ambulance, but the paramedic system is still in place. The Minister of Health can address those issues better than I can. They contracted with us, in a way, to provide a certain number of planes for their requirements. For the moment, that's going as well. However, the employees have made it known that they have put a proposal in to the Minister of Health. I don't want to speak out of turn, but I believe the Minister of Health will be putting out a proposal call for ambulance services, given that we're no longer providing planes for his use. My understanding is that some of the employees may put a proposal in, hon. member. I know no more than that.
L. Fox: If I understand the minister correctly, discussion about whether or not the ambulance portion is going to be done on a contract basis with the private sector is better held with the Health ministry. When we're talking about Government Air and its delivery of services to the executive council, we're talking about this sector.
I'll admit that the pilots came to most opposition members, and perhaps government members, to express their concerns and ask for a second look at this issue. With all due respect to their lobbying, I had great difficulty accepting the logic of maintaining that service. When I asked the Minister of Health in the Health estimates a year and a half ago to review the existing service and to look at something else, I supported the idea of privatizing the service.
A couple of things have happened that I wanted to ask questions about. One, when this government took over in 1991, there were 47 employees. There was an allotment within the budget for 50 FTEs, but only 47 of them were in place. Up to this budget year, that had increased to 73. There's an argument to be made and some concern.... One of the initiatives by this government was to put the SKED service in place, recognizing, of course, that the management of Government Air had lobbied for that over a number of years. Prior to that, the particularly inefficient service had helped to bring down the whole economic achievements of the government air services. The minister may just want to talk about it.
Hon. R. Blencoe: Let me just quickly put some stuff on the record, because I think this is good questioning. Everybody knows that there was an extensive Treasury Board review of Government Air which had been ongoing for some time. After the budget announcement was made, the union asked me and the Minister of Finance to get together with their representatives to take a look at the Treasury Board review and the numbers. We basically opened the books to show them what we found. They came back with some numbers. If we had accepted all they put forward, the cost was still quite dramatic. We tried to indicate, as openly as possible, where the concerns were. The bottom line is that we will still proceed with the shutdown of Government Air.
In terms of the numbers you're referring to, hon. member, it's prior to my time, but let me try and give you some answers. There was a rejigging or reconfiguration of Government Air after a 1990 report. One of the issues was quality assurance, because more and more of the work was being done by the private sector. There had to be staff who could monitor the private sector, particularly in the air ambulance service, where 60 percent of the planes are private sector ones. There were some additions there for coordinated regional travel. Because of all the criticism about using Government Air for taxi services, we wanted to see if we could rejig it in terms of coordinating the regional travel for government, and there were some changes made there.
The provincial emergency program also came in under Government Air. The staff have pointed out to me that of the 73 staff that you referenced, 8 FTEs are just to cover the overtime that's required in terms of ambulance and all that kind of servicing we have to do.
There were some changes based on the 1990 report, which was chaired by Mr. Hugh Curtis -- I didn't know that. There
[ Page 11873 ]
were some changes made. However, the decision has been made: we're moving out of the government air services we've known.
L. Fox: I just got the high sign that we need to wrap it.
I want to make one very quick observation. Anybody who's sat outside of the system and watched the political harangue around the use of Government Air understands that it's a political football. If they looked honestly at the system -- and we'll get into this after -- I think they would also understand that some of the modifications that were tried over last two years were to try to depoliticize use of the planes. Obviously, dedicating part of their use to the provincial emergency program and part to the SKED flights and so on were all part of that process, and it provided a whole lot of inefficiencies to the operations. We'll get into that after lunch. I didn't want to forget to make that statement, so I wanted to make it now -- two hours can be a long time.
With that said, I move that we rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 11:40 a.m.
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